CREDIT FOR THE ELDERLY OR THE DISABLED

The credit for the elderly or the disabled is a nonrefundable credit available to low-income taxpayers who are age 65 or older or who are permanently and totally disabled at the end of the tax year. This credit has not been adjusted for inflation since 1983. Due to the numbers involved, nowadays it is a fairly rare occurrence when a taxpayer actually gets the credits, but we'll discuss it briefly for your awareness.

To be eligible for the credit, a taxpayer must be:

• A qualified individual (define below);
• A U.S. citizen or resident for the entire year (or a nonresident alien who is married to and filing a joint return with a U.S. citizen or resident); and
• Filing a joint return if married at the end of the tax year, unless the taxpayer and his spouse did not live together at any time during the tax year or the taxpayer qualifies to be considered unmarried.

A qualified individual is one who is 65 or older; or, if under age 65

1. is retired because of permanent and total disability,
2. had not reached the mandatory retirement age for his employer's retirement program at the beginning of the tax year, and
3. has received taxable disability benefits during the year.

 Disability Pensions

If a taxpayer under 65 is retired because of a disability and received a taxable disability pension due to this disability during the year from an employer-funded disability plan or a disability provision of a retirement plan, he is eligible to claim the credit for the elderly or disabled if he was permanently and totally disabled at the time he retired and is still permanently and totally disabled.