Posted by Thomas G Kinsella, ATP

Elderly Tax Credits: Do You Qualify?

Elderly Tax Credits: Do You Qualify?

Many Americans do not like taxes. As a result, people do look for everything possible to reduce what they send to Uncle Sam. This is where deductions come in as they help reduce people's taxable income, bringing down the amount of tax they pay. 

On the other hand, tax credits are wonderful. They make available a dollar to dollar reduction for taxes if they fit the requirement. This credit can have a significant reduction on your tax credit when it is time to pay tax. 

This tax credit value ranges from about $3,750 to $7,500 though it depends on your income and your filing status. 

For someone that owes $4,500 in tax credit and got a $4,000 tax credit, the person's tax credit will be $500. This is a nonrefundable credit, meaning that if someone gets a credit that is more than the tax amount owed, the person will not get a check for the difference. Also, one will not owe any tax, which is good. 

Qualification for the Credit

There are a few things one needs to qualify for this tax credit. 

As long as one is a citizen or resident alien, one can qualify. Also, one can be eligible if one is a nonresident alien married to an American citizen. 

For age qualification based on elderly status, one needs to be 65 or above this by the tax year's end. Judging by the tax year, one is considered to be 65 years old on the day just before the 65th birthday. As a result, someone born on the 2nd of Jan 1955 will be regarded as 65 years on the 1st of Jan 2019.

Someone below 65 might qualify for the credit classified as "disabled" if the disability is total and permanent, and you got your income for taxable disability in 2019. You are below the specified retirement age. 

More importantly, one will need a writing from a specialized and qualified doctor that one is not fit to engage in any stressful or substantial gainful activity due to the mental or physical condition. According to the doctor, the condition must be projected to last for a year or more or that the condition is terminal. 

The concept of substantial gainful activity means the capacity to earn the least wage possible from the employer. It does not relate to keeping the house clean or going to purchase groceries. 

The taxable disability income could be from the accident plan of the employer, pension, or health plan, for instance. Also, it can be the income inside one's wage due to time out one takes from total or permanent disability. 

Passing the Required Income Tests

If one meets the qualifications, there are a few income restrictions one needs to rise above. 

Single filers, for instance, need to have their 2019 AGI below $17,500, which is the first qualification. The full social security benefits that cannot be taxed alongside other nontaxable pensions cannot be more than $5,000. Failing any of these two tests disqualifies one for the tax credit. These specified income limits need to be passed for one to get the tax credit. The specified income limit binds both qualifying widow and head of household.

These income limits vary for various filing statuses of the married. For one to pass, the following must be true:

  • You are a couple going through the joint filing route, and one of the couples qualifies. Also, the AGI should be below $20,000, and social security alongside other income is below $5,000. 

  • You are a couple going filing jointly, and both couples qualify. The AGI is below $25,000, and other income is below $25,000, while other income is also below $7,500.

  • A married couple filing separately, and you live in a different place from your spouse for the whole year. The AGI needs to be below $12,500, while other income should also be below $3,750.

The information provided might seem too much to absorb. We recommend connecting with a tax professional to help you make sense of it and see if you qualify.



Thomas G Kinsella, ATP
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