Cat. No. 12059R

Instructions for

Schedule 3 (Form 1040A)

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

Department of the Treasury 2001 Internal Revenue Service

Purpose of Schedule

Use Schedule 3 to figure the credit for the elderly or the

disabled.

Additional Information

See Pub. 524 for more details about the credit.

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 2001 or

● You were under age 65 at the end of 2001 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 2001.

3. On January 1, 2001, 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 2001, you cannot

take the credit.

Income Limits

See the chart below.

Want the IRS To Figure Your Credit?

If you can take the credit and you want us to figure it for

you, check the box in Part I of Schedule 3 for your filing

status and age. Fill in Part II and lines 11 and 13 of Part III

if they apply to you. Then, enter “CFE” next to line 28 on

Form 1040A and attach Schedule 3 to your return.

Income Limits for the Credit for the Elderly or the Disabled

IF you are . . .

Single, head of household, or

qualifying widow(er)

Married filing a joint return and

only one spouse is eligible for the

credit

Married filing a joint return and

both spouses are eligible for the

credit

Married filing a separate return and

you lived apart from your spouse

for all of 2001

The amount on

Form 1040A, line 20, is . . .

$17,500 or more

$20,000 or more

$25,000 or more

$12,500 or more

THEN you generally cannot take the credit if:

Or you received . . .

$5,000 or more of nontaxable social

security or other nontaxable pensions

$5,000 or more of nontaxable social

security or other nontaxable pensions

$7,500 or more of nontaxable social

security or other nontaxable pensions

$3,750 or more of nontaxable social

security or other nontaxable pensions
Page 2

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 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 were of a nonproductive,

make-work nature. More facts are needed to determine if

John is able 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, see Pub. 525.

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 or got 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 do not have to file this statement with your Form

1040A. But you must keep it for your records. You may

use the physician’s statement on page 4 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 get a statement.

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

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

and your physician signed on line B of the statement, you

do not have to get another statement for 2001. But you must

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

following:

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

year.

2. You were permanently and totally disabled during

2001.

3. You were unable to engage in any substantial gainful

activity during 2001 because of your physical or mental

condition.

If you checked box 4, 5, or 6 in Part I, enter in the space

above the box on 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 use 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.
Page 3

Part III

Figure Your Credit

Line 11

If you checked box 2, 4, 5, 6, or 9 in Part I, use the

following chart to complete line 11.

IF you checked . . .

The total of $5,000 plus the

disability income you reported on

Form 1040A for the spouse who

was under age 65.

The total amount of disability

income you reported on Form

1040A.

The total amount of disability

income you reported on Form

1040A for both you and your

spouse.

Box 6

Box 2, 4, or 9

Box 5

THEN enter on line 11 . . .

Example 1. Bill, age 63, retired on permanent and total

disability in 2001. 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 2001. 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 Through 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 2001 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 14a and line 14b.

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 2001.

● 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 National Oceanic and Atmospheric Administration or the

Public Health Service. Also, do not include a disability

annuity payable under section 808 of the Foreign Service

Act of 1980.

Line 20

Use the worksheet below to figure the credit you may take if

either 1 or 2 below apply.

1. The amount on line 20 is more than the amount on

Form 1040A, line 26, or

2. You are claiming the credit for child and dependent

care expenses on Form 1040A, line 27.

If neither 1 nor 2 above apply to you, enter on Form

1040A, line 28, the amount from Schedule 3, line 20.

Credit Limit Worksheet—Line 20 Keep for Your Records

1.

1.

Enter the amount from Form 1040A, line

26, minus any credit for child and

dependent care expenses on Form

1040A, line 27

2. Enter the credit you first figured on

Schedule 3, line 20

Enter the smaller of line 1 or line 2 here

and on Form 1040A, line 28. If line 1 is

the smaller amount, also replace the

amount on Schedule 3, line 20, with that

amount

3.

2.

3.
Page 4

Instructions for Physician’s Statement

Taxpayer

If you retired after 1976, enter the date you retired in the

space provided on the statement below.

was permanently and totally disabled on January 1, 1976, or January 1, 1977, or was permanently and totally disabled on the

date he or she retired. If retired after 1976, enter the date retired. 

Physician: Sign your name on either line A or B below.

Physician’s Statement Keep for Your Records

I certify that

Physician

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 disability has lasted or

can be expected to last continuously for at least a year or

can lead to death.

A The disability has lasted or can be expected to last

continuously for at least a year

B There is no reasonable probability that the disabled condition

will ever improve

Name of disabled person

Physician’s signature Date

Physician’s signature Date

Physician’s name Physician’s address