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IRS.gov Website
Publication 524
taxmap/pubs/p524-002.htm#en_us_publink100038698

Figuring the Credit Yourself(p5)

rule
If you figure the credit yourself, fill out the front of Schedule R. Next, fill out Schedule R, Part III. If you file Form 1040A, enter the amount from Schedule R, line 22 on line 30. If you file Form 1040, include the amount from Schedule R, line 22 on line 53, check box c, and enter "Sch R" on the line next to that box.
Tax Tip
There are five steps in Part III to determine the amount of your credit.
  1. Determine your initial amount (lines 10–12).
  2. Determine the total of any nontaxable social security and certain other nontaxable pensions, annuities, and disability benefits you received (lines 13a, 13b, and 13c).
  3. Determine your excess adjusted gross income (lines 14–17).
  4. Determine the total of steps 2 and 3 (line 18).
  5. Determine your credit (lines 19–22).
These steps are discussed in more detail next.
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Step 1. Determine Initial Amount(p5)

rule
To figure the credit, you must first determine your initial amount using lines 10 through 12. See Table 2. Your initial amount is on line 12.
taxmap/pubs/p524-002.htm#en_us_publink100038701

Initial amounts for persons under age 65.(p5)

rule
If you are a qualified individual under age 65, your initial amount cannot be more than your taxable disability income.
taxmap/pubs/p524-002.htm#en_us_publink1000259408
Special rules for joint returns.(p5)
If you are a qualified individual under age 65, and your spouse is also a qualified individual, your initial amount is your taxable disability income plus $5,000.
If you are a qualified individual, and both you and your spouse are under age 65, your initial amount cannot be more than your combined taxable disability income.
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Step 2. Total Certain Nontaxable Pensions and Benefits(p6)

rule
Step 2 is to figure the total amount of nontaxable social security and certain other nontaxable payments you received during the year. You must reduce your initial amount by these payments.
Enter these nontaxable payments on lines 13a or 13b and total them on line 13c. If you are married filing jointly, you must enter the combined amount of nontaxable payments both you and your spouse received.
Tax Tip
Worksheets are provided in the instructions for Forms 1040 and 1040A to help you determine if any of your social security benefits (or equivalent railroad retirement benefits) are taxable.
Include the following nontaxable payments in the amounts you enter on lines 13a and 13b.
EIC
You should be sure to take into account all of the nontaxable amounts you receive. These amounts are verified by the IRS through information supplied by other government agencies.
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Step 3. Determine Excess Adjusted Gross Income(p6)

rule
You also must reduce your initial amount by your excess adjusted gross income. Figure your excess adjusted gross income on lines 14–17.
You figure your excess adjusted gross income as follows.
  1. Subtract from your adjusted gross income (Form 1040A, line 22 or Form 1040, line 38) the amount shown for your filing status.
    1. $7,500 if you are single, a head of household, or a qualifying widow(er) with dependent child,
    2. $10,000 if you are married filing jointly, or
    3. $5,000 if you are married filing separately and you and your spouse did not live in the same household at any time during the tax year.
  2. Divide the result of (1) by 2.
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Step 4. Determine the Total of
Steps 2 and 3(p7)

rule
To determine if you can take the credit, you must add (on line 18) the amounts you figured in Step 2 (line 13c) and Step 3 (line 17).
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Step 5. Determine Your Credit(p7)

rule
Subtract the amount determined in Step 4 (line 18) from the amount determined in Step 1 (line 12), and multiply the result by 15% (.15).
In certain cases, the amount of your credit may be limited. See Limit on credit, later.
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Example.(p7)

You are 66 years old and your spouse is 64. Your spouse is not disabled. You file a joint return on Form 1040. Your adjusted gross income is $14,630. Together you received $3,200 from social security, which was nontaxable. You figure the credit as follows:
Example applying the 5 step processAmount
(Line references (shown in parentheses) are to the Schedule R)
  
1.Initial amount (line 12)$5,000
2. Total nontaxable social security
and other nontaxable
pensions (line 13c)
$3,200 
3.Excess adjusted gross income
($14,630–$10,000) ÷ 2 (line 17)
2,315 
4.Add (2) and (3) (line 18)5,515
5.Subtract (4) from (1) (line 12 – line 18 = line 19)
(Do not enter less than -0-)
$ -0-
You cannot take the credit because your nontaxable social security plus your excess adjusted gross income is more than your initial amount.
taxmap/pubs/p524-002.htm#en_us_publink100038709

Limit on credit.(p7)

rule
The amount of credit you can claim is generally limited to the amount of your tax. Use the Credit Limit Worksheet in the Instructions for Schedule R to determine if your credit is limited.
taxmap/pubs/p524-002.htm#en_us_publink100038710

Examples(p7)

rule
The following examples illustrate the credit for the elderly or the disabled. The initial amounts are taken from Table 2, earlier.
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Example 1.(p7)

James Davis is 58 years old, single, and files Form 1040A. In 2011 he retired on permanent and total disability, and he is still permanently and totally disabled. He got the required physician's statement in 2011 and kept it with his tax records. His physician signed on line B of the statement. This year James checks the box in Schedule R, Part II. He does not need to get another statement for 2013.
He received the following income for the year:
Nontaxable social security $1,500
Interest (taxable)100
Taxable disability pension 11,400
   
James' adjusted gross income is $11,500 ($11,400 + $100). He figures the credit on Schedule R as follows:
1.Initial amount  $5,000
2.Taxable disability pension  11,400
3.Smaller of line 1 or line 2  5,000
4.Nontaxable social security
benefits
$1,500  
5.Excess adjusted gross income
($11,500 − $7,500) ÷ 2
 2,000  
6.Add lines 4 and 5  3,500
7.Subtract line 6 from line 3
(Do not enter less than (-0-))
 1,500
8.Multiply line 7 by 15% (.15)  225
9.Enter the amount from the
Credit Limit Worksheet in the
Instructions for Schedule R, line 21
 151
10.Credit (Enter the smaller of
line 8 or line 9)
 $ 151
He enters $151 on line 30 of Form 1040A. The Schedule R for James Davis is not shown.
taxmap/pubs/p524-002.htm#en_us_publink100038712

Example 2.(p7)

William White is 53. His wife Helen is 49. William had a stroke 3 years ago and retired on permanent and total disability. He is still permanently and totally disabled because of the stroke. In November, Helen was injured in an accident at work and retired on permanent and total disability.
William received nontaxable social security disability benefits of $2,000 during the year and a taxable disability pension of $6,200. Helen earned $12,500 from her job and received a taxable disability pension of $1,700. Their joint return on Form 1040 shows adjusted gross income of $20,400 ($6,200 + $12,500 + $1,700). They do not itemize deductions. They do not have any amounts that would increase their standard deduction.
Helen's doctor completed the physician's statement in the Instructions for Schedule R. Helen is not required to include the statement with their return, but she must keep it for her records.
William got a physician's statement for the year he had the stroke. His doctor had signed on line B of that physician's statement to certify that William was permanently and totally disabled. William has kept the physician's statement with his records. He checks the box on Schedule R, Part II and writes his first name in the space above the box on line 2.
William and Helen use Schedule R to figure their $41 credit for the elderly or the disabled. They attach Schedule R to their Form 1040 and enter $41 on line 53. They check box c on line 53 and enter "Sch R" on the line next to that box. See their filled-in Schedule R and Helen's filled-in physician's statement, later.
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Pencil

Instructions for Physician's Statement

  
TaxpayerPhysician
If you retired after 1976, enter the date you retired in the space provided on the statement below.A person is permanently and totally disabled if both of the following apply:
 1.  He or she cannot engage in any substantial gainful activity because of a physical or mental condition.
 2.  A physician determines that the disability has lasted or can be expected to last continuously for at least a year or can lead to death.
Physician's Statement  
 
  I certify that                           Helen A. White             
Name of disabled person
was permanently and totally disabled on January 1, 1976, or January 1, 1977, or was permanently and totally disabled on the date he or she retired. If retired after 1976, enter the date retired ▶    November 1, 2013      
 
Physician: Sign your name on either A or B below.
A The disability has lasted or can be expected to last continuously for at least a year                    
 Physician's signature      Date
B There is no reasonable probability that the disabled condition will ever improve          Ayden D. Doctor     2/8/14   
 Physician's signature      Date
Physician's name Physician's address
    Ayden D. Doctor1900 Green St., Hometown, MD 20000   
  
  
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