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Publication 17
Your Federal Income Tax

For Individuals

For use in preparing 2002 Returns

Credit Figured for You

If you choose to have the Internal Revenue Service (IRS) figure the credit for you, read the following discussion for the form you will file (Form 1040 or 1040A). If you want the IRS to figure your tax, see chapter 31.

Form 1040.   If you want the IRS to figure your credit, see Form 1040 Line Entries under Tax Figured by IRS in chapter 31.

Form 1040A.   If you want the IRS to figure your credit, see Form 1040A Line Entries under Tax Figured by IRS in chapter 31.

Examples

The following examples illustrate the credit for the elderly or the disabled. The initial amounts are taken from Table 34-1, shown earlier.

Example 1.   James Davis is 58 years old, single, and files Form 1040A. In 1998 he retired on permanent and total disability, and he is still permanently and totally disabled. He got the required physician's statement in 1998, and kept it with his records. His physician signed on line B of the statement. This year James checks the box in Part II of Schedule 3. He does not need to get another statement for 2002.

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 3 as follows:

1) Initial amount $5,000
2) Taxable disability pension 11,400
3) Smaller of (1) or (2)  5,000
4) Subtract the total of:
a) Nontaxable disability benefits (social security) $1,500
b) Excess adjusted gross income [($11,500 - $7,500) ÷ 2] 2,000 3,500
5) Balance (Not less than 0) 1,500
6) Multiply line 5 × 15%(.15))  225
7) Enter the amount from Form 1040A, line 28.  383
8) Enter any amounts from Form 1040A, line 29.  0
9) Subtract line 8 from line 7  383
10) Credit (Enter the smaller of line 6 or line 9)  $225

His credit is $225. He enters $225 on line 30 of Form 1040A. The Schedule 3 for James Davis is not shown.

Example 2.   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 of last year, Helen was injured in an accident at work and retired on permanent and total disability.

William received nontaxable social security disability benefits of $3,000 during the year and a taxable disability pension of $6,000. Helen earned $9,200 from her job and received a taxable disability pension of $1,000. Their joint return on Form 1040 shows adjusted gross income of $16,200 ($6,000 + $9,200 + $1,000).

Helen got her doctor to complete the physician's statement in the instructions for Schedule R. Helen is not required to include the statement with her 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 physicians's statement with his records. He checks the box in Part II of Schedule R and writes his first name in the space above line 2.

William and Helen use Schedule R to figure their $135 credit for the elderly or the disabled. They attach Schedule R to their joint return and enter $135 on line 47 of Form 1040. See their filled-in Schedule R and Helen's filled-in physician's statement on the next three pages.

Schedule R, Pg 1 Schedules (Form 1040): R

Schedule R, Pg 1 Schedules (Form 1040): R

Schedule R, Pg 2

Schedule R, Pg 2

Helen's physician's statement

Helen's physician's statement

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