Federal Tax Credit for the Elderly and Disabled

Page Reviewed / Updated - Feb. 2014

The following information has been reviewed and is accurate for the tax year 2013, which is filed in the calendar year 2014.

Definition

Tax Credits are credits applied to the taxes you owe. If you owe $3,000 in taxes and you have a credit for $500, then you only have to pay $2,500. The Tax Credit for the Elderly and Disabled is a credit for persons over 65, or under 65 and disabled.

 

Discussion

While a tax credit is not a source of new funds or specifically funding for eldercare, it represents additional disposable income and can be used to reduce the overall cost of caring for an aging loved one. When combined with other options, it might make the difference between affording home care or assisted living or not having that option. 

 This credit is applied to a tax filer’s return, therefore an aging parent claimed who is claimed as a dependent on someone else’s tax return is not eligible.

For some families, depending on their individual tax situation, it may be advantageous to forego the Elderly and Disabled Tax Credit and have the elderly individual claimed as a dependent on the tax return of an adult child.  However, Dependent Care Credit(s), cannot be used for persons who reside in skilled nursing facilities or assisted living residences.  The following three other tax related options may also help indirectly reduce the cost of eldercare.

For some families, depending on their individual tax situation, it may be advantageous to forego the Elderly and Disabled Tax Credit and have the elderly individual claimed as a dependent on the tax return of an adult child. The following three other tax related options may also help indirectly reduce the cost of eldercare.

1) Tax Deductions of an Elderly Dependent’s Medical Expenses

2) Federal Tax Credits for Elderly Dependent Care

3) State Tax Credits for Elderly Dependent Care

It can be difficult to determine how to structure one’s expenses and choose between the available tax credits and deductions to get the greatest tax savings. Online tax preparation services such as TurboTax Calculators and Tips can greatly facilitate this process as they enable a tax filer to easily examine multiple scenarios and choose the best approach.

 

Qualifying
  • Age - individuals must be age 65 or over or if they are under 65, they may be eligible if they are retired on permanent and total disability and receive taxable disability income.
  • Disabilities / Health - there are no health or disability requirements if the filer is 65 years or older. If younger, he or she must be retired on permanent and total disability and receive taxable disability income.
  • Family Status - Both married and single persons are eligible for this credit.
  • Financial - this credit has eligibility limits base on the filers adjusted gross income or the total of your nontaxable social security and other nontaxable pension(s). One's filing status affects the limits as outlined in the table below. 

Elderly and Disable Tax Credit Income Limits for 2013

Filing Status

Your adjusted gross income must be less than

OR the total of your nontaxable social security and pension payments must be less than

Single, Head of household, or Qualifying widow(er) with dependent child

$17,500

$5,000

Married filing a joint return and both spouses qualify

$25,000

$7,500

Married filing a joint return and only one spouse qualifies

$20,000

$5,000

Married filing a separate return and you did not live with your spouse at any time during the year

$12,500

$3,750

 

 

Credit Limits

The maximum amount for the Elderly and Disabled Tax Credit in 2013 is $1,125.

 

How to File

In order to claim the credit, you must fill out Schedule R: Elderly and Disabled Tax Credit when you file your federal return. Read the IRS Publication 524: Elderly and Disabled Tax Credit for more information.