Irs Publication 524 - Credit For The Elderly Or The Disabled

Example 4. Joan, who retired on disability from a job as

absent from work because of permanent and total

a bookkeeper, lives with her sister who manages several

disability.

motel units. Joan helps her sister for 1 or 2 hours a day by

Payments that are not disability income. Any pay-

performing duties such as washing dishes, answering

phones, registering guests, and bookkeeping. Joan can

ment you receive from a plan that does not provide for

select the time of day when she feels most fit to work. Work

disability retirement is not disability income. Any lump-sum

of this nature, performed off and on during the day at

payment for accrued annual leave that you receive when

you retire on disability is a salary payment and is not

Joan’s convenience, is not activity of a “substantial and

gainful” nature even if she is paid for the work. The per-

disability income.

formance of these duties does not, of itself, show that Joan

For purposes of the credit for the elderly or the disabled,

is able to engage in substantial gainful activity.

disability income does not include amounts you receive

after you reach mandatory retirement age. Mandatory re-

Sheltered employment. Certain work offered at quali-

tirement age is the age set by your employer at which you

fied locations to physically or mentally impaired persons is

would have had to retire, had you not become disabled.

considered sheltered employment. These qualified loca-

tions are in sheltered workshops, hospitals and similar

Income Limits

institutions, homebound programs, and Department of

Veterans Affairs (VA) sponsored homes.

To determine if you can claim the credit, you must consider

Compared to commercial employment, pay is lower for

two income limits. The first limit is the amount of your

sheltered employment. Therefore, one usually does not

adjusted gross income (AGI). The second limit is the

look for sheltered employment if he or she can get other

amount of nontaxable social security and other nontaxable

employment. The fact that one has accepted sheltered

pensions you received. The limits are shown in Figure B.

employment is not proof of the person’s ability to engage in

If both your AGI and your nontaxable pensions are less

substantial gainful activity.

than the income limits, you may be able to claim the credit.

See

Figuring the Credit Yourself,

later.

Physician’s statement. If you are under age 65, you

must have your physician complete a statement certifying

If either your AGI or your nontaxable pensions are

that you were permanently and totally disabled on the date

equal to or more than the income limits, you

you retired. You can use the statement in the instructions

cannot take the credit.

CAUTION

for Schedule R.

You do not have to file this statement with your Form

1040 or Form 1040A, but you must keep it for your records.

Credit Figured for You

Veterans. If the Department of Veterans Affairs (VA)

certifies that you are permanently and totally disabled, you

You can figure the credit yourself, or the Internal Revenue

can substitute VA Form 21-0172, Certification of Perma-

Service (IRS) will figure it for you. See

Figuring the Credit

nent and Total Disability, for the physician’s statement you

Yourself,

next.

are required to keep. VA Form 21-0172 must be signed by

If you can take the credit and you want the IRS to figure

a person authorized by the VA to do so. You can get this

the credit for you, attach Schedule R to your return. Check

form from your local VA regional office.

the appropriate box in Part I of Schedule R and fill in Part II

Physician’s statement obtained in earlier year. If you

and lines 11 and 13 of Part III, if they apply to you.

got a physician’s statement in an earlier year and, due to

If you file Form 1040A, enter “CFE” in the space to the

your continued disabled condition, you were unable to

left of Form 1040A, line 30. If you file Form 1040, check

engage in any substantial gainful activity during 2009, you

box c on Form 1040, line 53, and enter “CFE” on the line

may not need to get another physician’s statement for

next to that box. Attach Schedule R to your return.

2009. For a detailed explanation of the conditions you must

meet, see the instructions for Part II of Schedule R. If you

Figuring the Credit Yourself

meet the required conditions, check the box on line 2 of

Part II of Schedule R.

If you checked box 4, 5, or 6 in Part I of Schedule R,

If you figure the credit yourself, fill out the front of Schedule

enter in the space above the box on line 2 in Part II the first

R. Next, fill out Part III of Schedule R. If you file Form

name(s) of the spouse(s) for whom the box is checked.

1040A, enter the amount from Schedule R, line 24 on line

30. If you file Form 1040, include the amount from Sched-

Disability income. If you are under age 65, you must also

ule R, line 24 on line 53, check box c, and enter “Sch R” on

have taxable disability income to qualify for the credit.

the line next to that box.

Disability income must meet both of the following require-

ments.

There are five steps in Part III to determine the

amount of your credit:

1. It must be paid under your employer’s accident or

health plan or pension plan.

2. It must be included in your income as wages (or

payments instead of wages) for the time you are

1. Determine your initial amount (lines 10–12).

Publication 524 (2009)

Page 5

Irs Publication 524 - Credit For The Elderly Or The Disabled - 2009 Page 5

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