Instructions for Form 1040 Schedule R |
2006 Tax Year |
Credit for the Elderly or the Disabled
This is archived information that pertains only to the 2006 Tax Year. If you are looking for information for the current tax year, go to the Tax Prep Help Area.
Use Schedule R (Form 1040) to figure the credit for the elderly or the disabled.
Additional information.
See
Pub. 524 for more details.
The credit is based on your filing status, age, and income. If you are married filing a joint return, it is also based on
your spouse's age and
income. You may be able to take this credit if either of the following applies.
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You were age 65 or older at the end of 2006, or
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You were under age 65 at the end of 2006 and you meet all of the following.
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You were permanently and totally disabled on the date you retired. If you retired before 1977, you must have been permanently
and totally
disabled on January 1, 1976, or January 1, 1977.
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You received taxable disability income for 2006.
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On January 1, 2006, you had not reached mandatory retirement age (the age when your employer's retirement program would have
required you to
retire).
For the definition of permanent and total disability, see
What Is Permanent and Total Disability? on page R-2. Also, see the instructions for Part II on page R-2.
Married Persons Filing Separate Returns
If your filing status is married filing separately and you lived with your spouse at any time during 2006, you cannot take
the credit.
If you were a nonresident alien at any time during 2006, you may be able to take the credit only if your filing status is
married filing jointly.
Want the IRS To Figure Your Credit?
If you can take the credit and you want us to figure it for you, check the box in Part I of Schedule R for your filing status
and age. Fill in Part
II and lines 11 and 13 of Part III if they apply to you. Then, enter “CFE” on the dotted line next to
line 49 on Form 1040 and attach Schedule R to your return.
Income Limits for the Credit for the Elderly or the Disabled
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THEN you generally cannot take the credit if:
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IF you are . . .
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The amount on Form 1040,
line 38, is . . .
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Or you received . . .
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Single, head of household, or qualifying widow(er)
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$17,500 or more
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$5,000 or more of nontaxable social security or other nontaxable pensions
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Married filing jointly and only one spouse is eligible for the credit
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$20,000 or more
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$5,000 or more of nontaxable social security or other nontaxable pensions
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Married filing jointly and both spouses are eligible for the credit
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$25,000 or more
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$7,500 or more of nontaxable social security or other nontaxable pensions
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Married filing separately and you lived apart from your spouse for all of 2006
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$12,500 or more
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$3,750 or more of nontaxable social security or other nontaxable pensions
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What Is Permanent and Total Disability?
A person is permanently and totally disabled if both 1 and 2 below apply.
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He or she cannot engage in any substantial gainful activity because of a physical or mental condition.
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A physician determines that the condition has lasted or can be expected to last continuously for at least a year or can lead
to
death.
Examples 1 and 2 on this page show situations in which the individuals are considered engaged in a substantial gainful activity.
Example 3 shows a
person who might not be considered engaged in a substantial gainful activity. In each example, the person was under age 65
at the end of the year.
Example 1.
Sue retired on disability as a sales clerk. She now works as a full-time babysitter at the minimum wage. Although
she does different work, Sue
babysits on ordinary terms for the minimum wage. She cannot take the credit because she is engaged in a substantial gainful
activity.
Example 2.
Mary, the president of XYZ Corporation, retired on disability because of her terminal illness. On her doctor's advice,
she works part time as a
manager and is paid more than the minimum wage. Her employer sets her days and hours. Although Mary's illness is terminal
and she works part time, the
work is done at her employer's convenience. Mary is considered engaged in a substantial gainful activity and cannot take the
credit.
Example 3.
John, who retired on disability, took a job with a former employer on a trial basis. The purpose of the job was to
see if John could do the work.
The trial period lasted for some time during which John was paid at a rate equal to the minimum wage. But because of John's
disability, he was given
only light duties of a nonproductive, make-work nature. Unless the activity is both substantial and gainful, John is not engaged
in a substantial
gainful activity. The activity was gainful because John was paid at a rate at or above the minimum wage. However, the activity
was not substantial
because the duties were of a nonproductive, make-work nature. More facts are needed to determine if John is able to engage
in a substantial gainful
activity.
Generally, disability income is the total amount you were paid under your employer's accident and health plan or pension plan
that is included in
your income as wages or payments instead of wages for the time you were absent from work because of permanent and total disability.
However, any
payment you received from a plan that does not provide for disability retirement is not disability income.
In figuring the credit, disability income does not include any amount you received from your employer's pension plan after
you have reached
mandatory retirement age.
For more details on disability income, see
Pub. 525.
Part II. Statement of Permanent and Total Disability
If you checked box 2, 4, 5, 6, or 9 in Part I and you did not file a physician's statement for 1983 or an earlier year, or
you filed or got a
statement for tax years after 1983 and your physician signed on line A of the statement, you must have your physician complete
a statement certifying
that:
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You were permanently and totally disabled on the date you retired, or
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If you retired before 1977, you were permanently and totally disabled on January 1, 1976, or January 1, 1977.
You do not have to file this statement with your Form 1040. But you must keep it for your records. You can use the physician's
statement on
page R-4 for this purpose. Your physician should show on the statement if the disability has lasted or can be expected to
last continuously for
at least a year, or if there is no reasonable probability that the disabled condition will ever improve. If you file a joint
return and you checked
box 5 in Part I, you and your spouse must each get a statement.
If you filed a physician's statement for 1983 or an earlier year, or you filed or got a statement for tax years after 1983
and your physician
signed on line B of the statement, you do not have to get another statement for 2006. But you must check the
box on line 2 in Part II to certify all three of the following.
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You filed or got a physician's statement in an earlier year.
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You were permanently and totally disabled during 2006.
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You were unable to engage in any substantial gainful activity during 2006 because of your physical or mental condition.
If you checked
box 4, 5, or 6 in Part I, enter in the space above the box on line 2 in Part II the first name(s) of the spouse(s) for whom
the box is checked.
If the Department of Veterans Affairs (VA) certifies that you are permanently and totally disabled, you can use VA Form 21-0172
instead of the
physician's statement. VA Form 21-0172 must be signed by a person authorized by the VA to do so. You can get this form from
your local VA regional
office.
Part III. Figure Your Credit
If you checked box 2, 4, 5, 6, or 9 in Part I, use the following chart to complete line 11.
Example 1.
Bill, age 63, retired on permanent and total disability in 2006. He received $4,000 of taxable disability income that
he reports on Form 1040, line
7. He is filing jointly with his wife who was age 67 in 2006. On line 11, Bill enters $9,000 ($5,000 plus the $4,000 of disability
income he reports
on Form 1040, line 7).
Example 2.
John checked box 2 in Part I and enters $5,000 on line 10. He received $3,000 of taxable disability income, which
he enters on line 11. John also
enters $3,000 on line 12 (the smaller of line 10 or line 11). The largest amount he can use to figure the credit is $3,000.
The amount on which you figure your credit can be reduced if you received certain types of nontaxable pensions and annuities.
The amount can also
be reduced if your adjusted gross income is over a certain amount, depending on which box you checked in Part I.
Line 13a.
Enter any social security benefits (before deduction of Medicare premiums) you (and your spouse if filing a joint
return) received for 2006 that
are not taxable. Also, enter any tier 1 railroad retirement benefits treated as social security that are not taxable.
If any of your social security or equivalent railroad retirement benefits are taxable, the amount to enter on this
line is generally the difference
between the amounts entered on Form 1040, line 20a and line 20b.
If your social security or equivalent railroad retirement benefits are reduced because of workers' compensation benefits,
treat the workers'
compensation benefits as social security benefits when completing Schedule R, line 13a.
Line 13b.
Enter the total of the following types of income that you (and your spouse if filing a joint return) received for
2006.
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Veterans' pensions (but not military disability pensions).
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Any other pension, annuity, or disability benefit that is excluded from income under any provision of federal law other than
the Internal
Revenue Code. Do not include amounts that are treated as a return of your cost of a pension or annuity.
Do not include on line 13b any pension, annuity, or similar allowance for personal injuries or sickness resulting
from active service in the armed
forces of any country, or in the National Oceanic and Atmospheric Administration or the Public Health Service. Also, do not
include a disability
annuity payable under section 808 of the Foreign Service Act of 1980.
Instructions for Physician's Statement
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.
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He or she cannot engage in any substantial gainful activity because of a physical or mental condition.
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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
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I certify that
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Name of disabled person
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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. ▶
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Physician: Sign your name on either line A or B below.
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A
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The disability has lasted or can be expected to last continuously for at least a year
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Physician's signature
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Date
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B
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There is no reasonable probability that the disabled condition will ever improve
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Physician's signature
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Date
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Physician's name
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Physician's address
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