What is the Senior Citizen or Disability Tax Credit?

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Today’s seniors face a world of expenses, from housing to transportation to health care. Similarly, people with disabilities often struggle to make ends meet, especially when their condition renders them unable to work. Fortunately, the IRS offers some relief in the form of a tax credit for the elderly or disabled. If you are 65 or older, or have a disability and your income is low enough, you may qualify for this helpful tax relief.

How tax credits work

Unlike deductions, which reduce the amount of your income subject to tax, a tax credit is a dollar-for-dollar reduction in your tax payable. If you qualify for a $2,000 tax credit, your tax bill will automatically be reduced by that amount, regardless of your income or effective tax rate. That said, most tax credits come with strict income limits, so they’re usually harder to get than deductions.

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Eligibility

To benefit from the tax credit for elderly or disabled persons, you must either:

  • 65 or older at the end of the tax year for which you are claiming the credit, or
  • Retired on permanent and total disability with taxable disability income

Note that even if you are not officially retiring, you may be considered a disability pensioner once your condition renders you unable to work.

Income limits

While the Seniors and Disability Credit can be something of a financial lifeline for those in need of tax relief, most people make too much money to qualify. You can use the following table to determine if you will qualify for the credit based on your income:

Tax return status

Adjusted gross income limit

Limit on non-taxable social security, pension, annuity, or disability income

Eligible single, head of household or widow(er) with dependent child

$17,500

$5,000

Filing married jointly with an eligible spouse

$20,000

$5,000

Married filing jointly with two eligible spouses

$25,000

$7,500

Married filing separately and both spouses lived separately during the year

$12,500

$3,750

DATA SOURCE: IRS.

Note that if your income exceeds the limit in any of the above categories, you will not be eligible for the credit. So if, for example, you are over 65, your tax status is single, your adjusted gross income is $16,000, but your non-taxable Social Security benefits are $6,000, you will not be not admissible.

Claim your credit

If you To do end up qualifying for the senior citizen or disability credit, you could reduce your taxes by $3,750 to $7,500. However, keep in mind that since the credit is non-refundable, all it can do is reduce your tax liability to zero. Some credits are refundable, which means that if they reduce your taxes to a negative balance, you will receive a check for the difference. Unfortunately, that provision doesn’t apply here, so even if the senior or disabled credit drops your balance below $0, you won’t be refunded the difference.

If you’re struggling to pay your bills as a senior, there are several tax benefits offered to retirees this can be of great help. If you don’t qualify for the senior citizen or disability credit, it pays to see what other options might help you reduce your tax burden.

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