The world changes fast, the same with human. Not until we experience an early death, we will all grow up and get gray hairs and wrinkled skin. Physical condition also changes and senior people are also facing financial challenges such as housing, transportations, medical expenses and basic needs. Fortunately the congress formulated a tax credit to provide a measure of tax relief for older citizens who were not receiving adequate amounts of social security or other nontaxable pensions. This tax break offers a lot of help and relief in taking care and supporting our older family members.
Elderly tax credit or disabled is also known as senior tax credit, is a federal tax credit that applies to tax returns if you are a senior or having a disability, regardless of your age and must meet the certain income requirements. This is a significant benefit to qualified seniors as it might cover the amount of any tax you might owe, which could result in a tax refund. Tax deductions lower the amount of your income subject to taxes, but a tax credit is a dollar for dollar reduction of your tax liability. If you are qualified, your tax bill will automatically be deducted with tax credit, regardless of how much you earn. This tax credits also come with strict income limits, it will a bit harder to qualify for the deductions.
What are the qualifications?
I. Taxpayer who is 65 years or older by the end of the tax year. If you and your spouse are 65 years old or older, you may be entitled to tax credit of as much as $1,125 against your tax. Taxpayers who are under 65 years old, retired with permanent and total disability and who have disability income from a public or private employer on account of disability, who have not yet reached the mandatory retirement age. Even if you don’t retire formally, you may be considered retired on disability when you stopped working because of your disability. Permanent and total disability is defined as an individual is permanently and totally disabled if he is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. An individual shall not be considered to be permanently and totally disabled unless he furnishes proof of the existence thereof in such form and manner, and at such times, as the Secretary may require.” – 26 US Code 22. You must also obtain a physician's certification stating the above mentioned condition.
II. Must be a U.S. citizen or a resident alien, exceptions apply to non-resident aliens married to U.S. citizens or resident aliens.
III. Must meet certain income limits:
For a single, head of household or qualifying widow(er) with dependent child, the adjusted gross income (AGI) of less than $17,500 or the total nontaxable social security and other nontaxable pension(s) must be less than $5,000.
For married spouse filing jointly and only one spouse qualifies, the AGI must be less than $20,000 or nontaxable social security is less than $5,000.
If a married couple filling tax returns jointly and both are qualified, AGI must be less than $25,000 or with total nontaxable social security and other nontaxable pension(s) must be less than $7,500. For married couple filing and has been living apart for the entire year AGI must be less than $12,500 or nontaxable social security and other nontaxable pension(s) must be less than $3,750.
The qualifying senior should not be listed as a dependent on someone else's tax returns; otherwise such tax credit will not apply. However, it may be advantageous for a senior to be claimed as a dependent as there are other tax benefits that may apply to the filer, including deductions for medical and dental expenses and home care or adult care costs. The filer must provide over half of the senior's financial support and the senior must be living with the filer for a full calendar year, for a senior to be considered a dependent on another’s tax return. Even if your parent receives sufficient income during the year does not mean the funds are used for their support. The support test looks to who actually pays rather than the parent’s ability to pay.
