Department of the Treasury

Internal Revenue Service

2004 Instructions for Schedule 3 (Form 1040A)

Use Schedule 3 to figure the credit for the elderly or the disabled. Credit for the Additional information. See Pub. 524 for more details.

Elderly or the

Disabled for

Form 1040A

Filers

Who Can Take the Credit Married Persons Filing Separate Returns

The credit is based on your filing status, age, and income. If If your filing status is married filing separately and you lived

you are married filing a joint return, it is also based on your with your spouse at any time during 2004, you cannot take

spouse’s age and income. You may be able to take this credit the credit.

if either of the following applies. Income Limits

1. You were age 65 or older at the end of 2004, or See the chart below.

2. You were under age 65 at the end of 2004 and you meet

all three of the following. Want the IRS To Figure Your Credit?

If you can take the credit and you want us to figure it for you, a. You were permanently and totally disabled on the date check the box in Part I of Schedule 3 for your filing status and you retired. If you retired before 1977, you must have been age. Fill in Part II and lines 11 and 13 of Part III if they apply permanently and totally disabled on January 1, 1976, or to you. Then, enter “CFE” on Form 1040A in the space to the January 1, 1977. left of line 30 and attach Schedule 3 to your return. b. You received taxable disability income for 2004.

c. On January 1, 2004, 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.

Income Limits for the Credit for the Elderly or the Disabled

THEN you generally cannot take the credit if:

The amount on

IF you are . . . Form 1040A, line 22, is . . . Or you received . . .

Single, head of household, or qualifying $17,500 or more $5,000 or more of nontaxable social

widow(er) security or other nontaxable pensions

Married filing jointly and only one $20,000 or more $5,000 or more of nontaxable social

spouse is eligible for the credit security or other nontaxable pensions

Married filing jointly and both spouses $25,000 or more $7,500 or more of nontaxable social

are eligible for the credit security or other nontaxable pensions

Married filing separately and you lived $12,500 or more $3,750 or more of nontaxable social

apart from your spouse for all of 2004 security or other nontaxable pensions

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Cat. No. 12059R
What Is Permanent and Total Disability? For more details on disability income, see Pub. 525.

A person is permanently and totally disabled if both 1 and 2

below apply. Part II 1. He or she cannot engage in any substantial gainful ac- Statement of Permanent and Total tivity because of a physical or mental condition.

2. A physician determines that the condition has lasted or Disability

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

lead to death. 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

Examples 1 and 2 below show situations in which the indi- filed or got a statement for tax years after 1983 and your

viduals are considered engaged in a substantial gainful activ- physician signed on line A of the statement, you must have

ity. Example 3 shows a person who might not be considered your physician complete a statement certifying that:

engaged in a substantial gainful activity. In each example, the • You were permanently and totally disabled on the date person was under age 65 at the end of the year. you retired, or

Example 1. Sue retired on disability as a sales clerk. She • If you retired before 1977, you were permanently and now works as a full-time babysitter at the minimum wage. totally disabled on January 1, 1976, or January 1, 1977. Although she does different work, Sue babysits on ordinary

terms for the minimum wage. She cannot take the credit be- You do not have to file this statement with your Form cause she is engaged in a substantial gainful activity. 1040A. But you must keep it for your records. You may use

Example 2. Mary, the president of XYZ Corporation, retired the physician’s statement on page 4 for this purpose. Your

on disability because of her terminal illness. On her doctor’s physician should show on the statement if the disability has

advice, she works part time as a manager and is paid more lasted or can be expected to last continuously for at least a

than the minimum wage. Her employer sets her days and year, or if there is no reasonable probability that the disabled

hours. Although Mary’s illness is terminal and she works part condition will ever improve. If you file a joint return and you

time, the work is done at her employer’s convenience. Mary checked box 5 in Part I, you and your spouse must each get a

is considered engaged in a substantial gainful activity and statement.

cannot take the credit.

If you filed a physician’s statement for 1983 or an earlier Example 3. John, who retired on disability, took a job with a year, or you filed or got a statement for tax years after 1983 former employer on a trial basis. The purpose of the job was and your physician signed on line B of the statement, you do to see if John could do the work. The trial period lasted for not have to get another statement for 2004. But you must some time during which John was paid at a rate equal to the

minimum wage. But because of John’s disability, he was check the box on line 2 in Part II to certify all three of the

following. given only light duties of a nonproductive, make-work nature. Unless the activity is both substantial and gainful, John 1. You filed or got a physician’s statement in an earlier is not engaged in a substantial gainful activity. The activity year. was gainful because John was paid at a rate at or above the 2. You were permanently and totally disabled during minimum wage. However, the activity was not substantial 2004. because the duties were of a nonproductive, make-work na- 3. You were unable to engage in any substantial gainful ture. More facts are needed to determine if John is able to

engage in a substantial gainful activity. activity during 2004 because of your physical or mental condition. Disability Income

Generally, disability income is the total amount you were If you checked box 4, 5, or 6 in Part I, enter in the space paid under your employer’s accident and health plan or pen- above the box on line 2 in Part II the first name(s) of the sion plan that is included in your income as wages or pay- spouse(s) for whom the box is checked. ments instead of wages for the time you were absent from

work because of permanent and total disability. However, If the Department of Veterans Affairs (VA) certifies that any payment you received from a plan that does not provide you are permanently and totally disabled, you can use VA for disability retirement is not disability income. Form 21-0172 instead of the physician’s statement. VA Form

In figuring the credit, disability income does not include 21-0172 must be signed by a person authorized by the VA to

any amount you received from your employer’s pension plan do so. You can get this form from your local VA regional

after you have reached mandatory retirement age. office.

Sch. 3-2
Line 13a. Enter any social security benefits (before deduc- Part III tion of Medicare premiums) you (and your spouse if filing a Figure Your Credit joint return) received for 2004 that are not taxable. Also,

enter any tier 1 railroad retirement benefits treated as social Line 11 security that are not taxable.

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

chart to complete line 11. If any of your social security or equivalent railroad retirement benefits are taxable, the amount to enter on this line is

IF you checked . . . THEN enter on line 11 . . . generally the difference between the amounts entered on

Form 1040A, line 14a and line 14b. Box 6 The total of $5,000 plus the disability

income you reported on Form 1040A

for the spouse who was under age 65. If your social security or equivalent railroad retirement benefits are reduced because of workers’

Box 2, 4, or 9 The total amount of disability income compensation benefits, treat the workers’ compen- you reported on Form 1040A. sation benefits as social security benefits when

Box 5 The total amount of disability income completing line 13a.

you reported on Form 1040A for both

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

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

2004. Example 1. Bill, age 63, retired on permanent and total disability in 2004. He received $4,000 of taxable disability in- • Veterans’ pensions (but not military disability pensions). come that he reported on Form 1040A, line 7. He filed a joint

return with his wife who was age 67 in 2004. On line 11, Bill • Any other pension, annuity, or disability benefit that is

enters $9,000 ($5,000 plus the $4,000 of disability income he excluded from income under any provision of federal law

reported on Form 1040A). other than the Internal Revenue Code. Do not include

amounts that are treated as a return of your cost of a pension Example 2. John checked box 2 in Part I and enters $5,000 or annuity. 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

Do not include on line 13b any pension, annuity, or similar (the smaller of line 10 or line 11). The largest amount he can

use to figure the credit is $3,000. allowance for personal injuries or sickness resulting from active service in the armed forces of any country, or in the

Lines 13a Through 18 National Oceanic and Atmospheric Administration or the

Public Health Service. Also, do not include a disability annu- The amount on which you figure your credit may be reduced ity payable under section 808 of the Foreign Service Act of if you received certain types of nontaxable pensions and an- 1980.

nuities. 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.

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Instructions for Physician’s Statement

Taxpayer 1. He or she cannot engage in any substantial gainful

activity because of a physical or mental condition. If you retired after 1976, enter the date you retired in the 2. A physician determines that the disability has lasted or space provided on the statement below. can be expected to last continuously for at least a year or can

lead to death.

Physician

A person is permanently and totally disabled if both of the

following apply.

Physician’s Statement Keep for Your Records

I certify that 

Name of disabled person

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.

A The disability has lasted or can be expected to last

continuously for at least a year .................

Physician’s signature Date

B There is no reasonable probability that the disabled

condition will ever improve ....................

Physician’s signature Date

Physician’s name Physician’s address

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