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The TaxAct® program will automatically determine if the credit from Schedule R is applicable on the return based on the information entered (e.g. date of birth).  If Schedule R is applicable to the return, the first screen in the Credits section of the Q&A will be Credit for the Elderly and the Disabled.  This section of the Q&A can also be accessed directly by clicking on the Federal tab (on smaller devices, click in the upper left-hand corner, then select Federal), then clicking Other Credits and selecting Credit for the elderly or the disabled.

If you are expecting this credit to calculate on your return and the credit is not appearing on Form 1040, Line 53, see the navigation steps below for items that may need to be verified.

Blind or Disabled (and Date of Birth):

  1. From within your TaxAct return (Online or Desktop), click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
  2. Click Basic Information to expand that category and then click Name and Address
  3. The first screen will reflect the taxpayer's date of birth and the second screen the spouse's (if applicable)
  4. Continue to the screen Blind or Disabled to make those indications for either the taxpayer or the spouse

Form 1099-R Type of Income (and the checkbox if you have not reached retirement age):

  1. From within your TaxAct return (Online or Desktop), click on the Federal tab. On smaller devices, click in the upper left-hand corner, then select Federal.
  2. Click Retirement Plan Income to expand the category and then click IRA, 401(k) and pension plan distributions  (Form 1099-R)
  3. Click Add to create a new copy of the form or click Review to review a form already created 
  4. Click Quick Entry or Step-by-Step Guidance to enter or review the information

If you select Quick Entry to enter the information directly on the supporting form, Code 3 - Disability should be selected in Box 7 (If that code is reflected in Box 7 of the Form 1099-R received in the mail). Scroll down and in the section Distribution from Disability Pension Treated as Wages, check the box if the distribution was from a disability pension and you have NOT reached the minimum retirement age set by your employer. When you are done entering the information click the red X in the top right corner of the form to save the information and close the form.

If you select Step-by-Step Guidance, proceed to the screen titled Retirement Plan Income - Disability and indicate if you have not reached the minimum retirement age set by your employer.  Note that you will only see this screen if Code 3 for disability is reflected in Box 7 (on the screen Retirement Plan Income - Box 7).

As the minimum retirement age is set by the employer, only by asking the employer can you determine whether or not minimum retirement age requirements have been met for a disability payment.

Additional Information

Per IRS Instructions for Schedule R Credit for the Elderly or the Disabled, page R-1:

Who Can Take The Credit

The credit is based on your filing status, age, and income. If you are married filing a joint return, it is also based on your spouse's age and income. You may be able to take this credit if either of the following applies.

  1. You were age 65 or older at the end of the current tax year, or
  2. You were under age 65 at the end of the current tax year and you meet all of the following. 
    1. You were permanently and totally disabled on the date you retired. If you retired before 1977, you must have been permanently and totally disabled on January 1, 1976, or January 1, 1977. 
    2. You received taxable disability income for the current tax year.
    3. On January 1 of the current tax year, you had not reached mandatory retirement age (the age when your employer's retirement program would have required you to retire).

What Is Permanent and Total Disability?

A person is permanently and totally disabled if both 1 and 2 below apply.

  1. He or she cannot engage in any substantial gainful activity because of a physical or mental condition.
  2. A qualified physician determines that the condition has lasted or can be expected to last continuously for at least a year or can lead to death.

Examples 1 and 2, next, show situations in which the individuals are considered engaged in a substantial gainful activity. Example 3 shows a person who might not be considered engaged in a substantial gainful activity. In each example, the person was under age 65 at the end of the year. (Click the link above to go to the publication to view the examples mentioned.)

Per IRS Publication 524 Credit for the Elderly or the Disabled, page 4:

Physician’s statement. If you are under age 65, you must have your physician complete a statement certifying that you had a permanent and total disability on the date you retired. You can use the statement in the instructions for Schedule R Credit for the Elderly or the Disabled.

You don't have to file this statement with your Form 1040 or Form 1040A, but you must keep it for your records.

Veterans. If the Department of Veterans Affairs (VA) certifies that you have a permanent and total disability, you can substitute VA Form 21-0172, Certification of Permanent and Total Disability, for the physician’s statement you are required to keep. VA Form 21-0172 must be signed by a person authorized by the VA to do so. You can get this form from your local VA regional office.

Physician’s statement obtained in earlier year. If you got a physician’s statement in an earlier year and, due to your continued disabled condition, you were unable to engage in any substantial gainful activity during 2016, you may not need to get another physician’s statement for 2016. For a detailed explanation of the conditions you must meet, see the instructions for Schedule R, Part II. If you meet the required conditions, check the box on Schedule R, Part II, Line 2.


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