You may qualify to take this credit if you meet either of the following tests:
You are age 65 or older; or
You are under 65, have retired on permanent and total disability, and received taxable disability benefits.
If you pass the age or disability test, then your income must fall below the limits set for your filing status to take this credit. If you’re filing a single, head of household, or qualifying widow(er) return and your adjusted gross income (AGI) is $17,500 or more, you can’t take the credit. You also can’t take the credit if you received $5,000 or more of nontaxable Social Security or other nontaxable pension or disability benefits.
If you’re filing a joint return, the income limit depends upon whether one or both of you pass the age or disability test. If you both pass the test and your AGI is $25,000 or more, or you received $7,500 or more in nontaxable benefits, then you can’t take the credit. If only one of you qualifies, you can’t take the credit if your AGI is $20,000 or more, or you received $5,000 or more in nontaxable benefits.
For the purposes of this credit, you can file a married filing separately return only if you didn’t live with your spouse during the year. If you’re filing a married filing separately return and your AGI is $12,500 or more, or you received $3,750 or more in nontaxable benefits, you can’t take the credit.
The credit is claimed on Schedule R of Form 1040. The calculation to determine the amount of the credit that can be claimed is a multi-step process that is complicated and takes into consideration the taxpayers age, filing status and whether they are disabled. Taxpayers may choose to allow the IRS to compute the amount of the credit for them by checking the box in Part I of Schedule R indicating their filing status and age, filling in Part II, and in Part III completing lines 11 and 13 if applicable. The taxpayer will then enter “CFE” on the dotted line next to line 53 on Form 1040 and attaching Schedule R to the return.
See IRS Publication 524: Credit for the Elderly or the Disabled for additional information.