Cat. No. 12059R

Instructions for

Schedule 3 (Form 1040A)

Credit for the Elderly or the Disabled for Form 1040A Filers

Department of the Treasury

Internal Revenue Service

Purpose of

schedule

Use Schedule 3 to figure the credit for the elderly or the disabled. If you want,

the IRS will figure the credit for you in most cases. For more details, see the

Form 1040A instructions on page 42.

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:

● You were age 65 or older at the end of 1995, OR

● You were under age 65 at the end of 1995 and you meet all three 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 1995.

3. On January 1, 1995, you had not reached mandatory retirement age (the age

when your employer’s retirement program would have required you to retire).

For the definition of permanent and total disability, see What is permanent

and total disability? on page 2. Also, see the instructions for Part II.

Married persons filing separate returns. If your filing status is married

filing separately and you lived with your spouse at any time during 1995, you

cannot take the credit.

Income limits. See the chart on page 2.
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Income limits for credit for the elderly or the disabled

If you are: You generally cannot take the credit if:

Single, Head of household, or

Qualifying widow(er)

The amount on Form 1040A, line 17, is

$17,500 or more; or you received $5,000 or

more of nontaxable social security or other

nontaxable pensions

Married filing a joint return

and only one spouse is eligible

for the credit

The amount on Form 1040A, line 17, is

$20,000 or more; or you received $5,000 or

more of nontaxable social security or other

nontaxable pensions

Married filing a joint return

and both spouses are eligible

for the credit

The amount on Form 1040A, line 17, is

$25,000 or more; or you received $7,500 or

more of nontaxable social security or other

nontaxable pensions

Married filing a separate return

and you lived apart from your

spouse for all of 1995

The amount on Form 1040A, line 17, is

$12,500 or more; or you received $3,750 or

more of nontaxable social security or other

nontaxable pensions

What is permanent and total disability? If you were under age 65 at the end

of 1995, you must be permanently and totally disabled to take the credit.

A person is permanently and totally disabled if both of the following apply:

1. He or she cannot engage in any substantial gainful activity because of a

physical or mental condition, and

2. A 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 below 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.

Example 1. Sue retired on disability as a sales clerk. She now works as a

full-time babysitter at the minimum wage. Although she does different work,

Sue babysits on ordinary terms for the minimum wage. She cannot take the

credit because she is engaged in a substantial gainful activity.

Example 2. Mary, the president of XYZ Corporation, retired on disability

because of her terminal illness. On her doctor’s advice, she works part-time as a

manager and is paid more than the minimum wage. Her employer sets her days

and hours. Although Mary’s illness is terminal and she works part-time, the

work is done at her employer’s convenience. Mary is considered engaged in a

substantial gainful activity and cannot take the credit.

Example 3. John, who retired on disability, took a job with a former employer

on a trial basis. The purpose of the job was to see if John could do the work. The

trial period lasted for some time during which John was paid at a rate equal to

the minimum wage. But because of John’s disability, he was given only light

duties of a nonproductive, make-work nature. Unless the activity is both

substantial and gainful, John is not engaged in a substantial gainful activity.

The activity was gainful because John was paid at a rate at or above the

minimum wage. However, the activity was not substantial because the duties
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were of a nonproductive, make-work nature. More facts are needed to establish

John’s ability to engage in a substantial gainful activity.

Disability income. Generally, disability income is the total amount you were

paid under your employer’s accident and health plan or pension plan that is

included in your income as wages or payments instead of wages for the time you

were absent from work because of permanent and total disability. However, any

payment you received from a plan that does not provide for disability retirement

is not disability income. In figuring the credit, disability income does not

include any amount you received from your employer’s pension plan after you

have reached mandatory retirement age. For more details on disability income,

get Pub. 525.

Additional information. Get Pub. 524 for more details about the credit.

Part II

Statement of

permanent and

total disability

If you checked box 2, 4, 5, 6, or 9 in Part I and you did not file a physician’s

statement for 1983 or an earlier year, or you filed a statement for tax years after

1983 and your physician signed on line A of the statement, you must have your

physician complete a statement certifying that:

● You were permanently and totally disabled on the date you retired, or

● If you retired before 1977, you were permanently and totally disabled on

January 1, 1976, or January 1, 1977.

You must attach this statement to Form 1040A. You may use the physician’s

statement in Part II for this purpose. Your physician should show on the

statement if the disability has lasted or can be expected to last continuously for

at least a year, or if there is no reasonable probability that the disabled

condition will ever improve. If you file a joint return and you checked box 5 in

Part I, you and your spouse must each file a statement. If both you and your

spouse use the statement in Part II, attach a separate Schedule 3 for your

spouse with only Part II filled in. Keep copies of these statements with your tax

records.

If you filed a physician’s statement for 1983 or an earlier year, or you filed a

statement for tax years after 1983 and your physician signed on line B of the

statement, you do not have to attach another statement for 1995. But you must

check the box on line 2 in Part II to certify all three of the following:

1. You filed a physician’s statement in an earlier year.

2. You were permanently and totally disabled during 1995.

3. You were unable to engage in any substantial gainful activity during 1995

because of your physical or mental condition.

If you checked box 4, 5, or 6 in Part I, write in the space to the left of line 2 in

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

If the Department of Veterans Affairs (VA) certifies that you are permanently

and totally disabled, you can file VA Form 21-0172 instead of the physician’s

statement. 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.

Part III

Figure your

credit

Line 11 If you checked box 2, 4, 5, 6, or 9 in Part I, complete line 11 as follows:

● If you checked box 6, add $5,000 to the disability income you reported on

Form 1040A for the spouse who was under 65. Enter the total on line 11.
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● If you checked box 2, 4, or 9, enter on line 11 the total amount of disability

income you reported on Form 1040A.

● If you checked box 5, enter on line 11 the total amount of disability income

for both you and your spouse that you reported on Form 1040A.

Example 1. Bill, age 63, retired on permanent and total disability in 1995. He

received $4,000 of taxable disability income that he reported on Form 1040A,

line 7. He filed a joint return with his wife who was age 67 in 1995. On line 11,

Bill enters $9,000 ($5,000 plus the $4,000 of disability income he reported on

Form 1040A).

Example 2. John checked box 2 in Part I and enters $5,000 on line 10. He

received $3,000 of taxable disability income, which he enters on line 11. John

also enters $3,000 on line 12 (the smaller of line 10 or line 11). The largest

amount he can use to figure the credit is $3,000.

Lines 13a–18 The amount on which you figure your credit may be reduced if you received

certain types of nontaxable pensions and annuities. The amount may also be

reduced if your adjusted gross income is over a certain amount, depending on

which box you checked in Part I.

Line 13a. Enter any social security benefits (before deduction of Medicare

premiums) you (and your spouse if filing a joint return) received for 1995 that

are not taxable. Also, enter any tier 1 railroad retirement benefits treated as

social security that are not taxable.

If any of your social security or equivalent railroad retirement benefits are

taxable, the amount to enter on this line is generally the difference between the

amounts entered on Form 1040A, line 13a and line 13b.

Note: If your social security or equivalent railroad retirement benefits are reduced

because of workers’ compensation benefits, treat the workers’ compensation

benefits as social security benefits when completing Schedule 3, line 13a.

Line 13b. Enter the total of the following types of income that you (and your

spouse if filing a joint return) received for 1995.

● Veterans’ pensions (but not military disability pensions).

● Any other pension, annuity, or disability benefit that is excluded from income

under any provision of Federal law other than the Internal Revenue Code.

Do not include amounts that are treated as a return of your cost of a

pension or annuity.

Do not include on line 13b any pension, annuity, or similar allowance for

personal injuries or sickness resulting from active service in the armed forces of

any country, or in the Coast and Geodetic Survey or the Public Health Service.

Also, do not include a disability annuity payable under section 808 of the

Foreign Service Act of 1980.

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