Page Reviewed / Updated - Jun. 2018
Tax Credits, such as the tax credit for the Elderly and Disabled, are credits applied to the taxes you owe. For instance, 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 years of age, as well as persons under 65 and disabled. However, to receive the tax credit as a disabled individual, one must be retired on permanent and total disability (preventing an individual from being employable) and they must have received taxable disability income during the year.
While a tax credit is not a source of new funds or specifically funding for eldercare, it represents additional disposable income, and it 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 the option for either.
Elderly and Disabled Tax Credit vs. Dependent Care Credit
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. This would allow the adult child to use the Dependent Care Credit. Worth noting though is that the Dependent Care Credit 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.
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 can greatly facilitate this process as they enable a tax filer to easily examine multiple scenarios and choose the best approach.
Elderly and Disabled Tax Credit Income Limits for 2017
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
Married filing a joint return and both spouses qualify
Married filing a joint return and only one spouse qualifies
Married filing a separate return and you did not live with your spouse at any time during the year
As of 2017, the maximum tax credit for the Elderly and Disabled Tax Credit ranges between $3,750 and $7,500.
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.