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

97

Purpose of Schedule

Use Schedule 3 to figure the credit for the elderly or

the disabled.

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 1997, OR

● You were under age 65 at the end of 1997 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 1997.

3. On January 1, 1997, 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 1997, 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, print “CFE” next

to line 24b on Form 1040A and attach Schedule 3 to

your return.

Income Limits for 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 1997

The amount on

Form 1040A, line 17, 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? If you were

under age 65 at the end of 1997, 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 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,

see Pub. 525.

Additional Information. See 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 1997. 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

1997.

3. You were unable to engage in any substantial

gainful activity during 1997 because of your physical or

mental condition.

If you checked box 4, 5, or 6 in Part I, print 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

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.
Page 3

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.

● 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 1997. 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 1997. 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 1997 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 1997.

● 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.