The Fate of Social Security

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Tax Credits for Seniors

There have been some recent changes to some of the tax credits available to seniors. Most notably, the Health Coverage Credit and the Credit for the Elderly and Disabled. In the article we will give you the eligibility requirements for each credit along with any other pertinent information. Should you have questions about these credits or any other questions surrounding your income tax then jump below to the bottom of this piece and find out where you can go for free tax assistance.

Health Coverage Tax Credit (Form 8885)

The HCTC is a refundable tax credit made available to help retired seniors and displaced workers that need assistance with their health insurance costs. In 2009 the credit was increased and now helps cover up to 80% of eligible premiums like medical coverage, prescription plans, mental health coverage, and more.

The HCTC has three eligibility requirements and all of them must be met to be in line for the tax credit. The requirements are:

At least one of the following must be true:

  • You are a Pension Benefit Guaranty Corp. pension recipient and under age 55.
  • You are receiving a Trade Readjustment Allowance under the Trade Adjustment Assistance (TAA) program and are attending a TAA-approved training course.
  • You are receiving a Trade Readjustment Allowance under the Trade Adjustment Assistance (TAA) program and are receiving unemployment compensation
  • You are receiving wage subsidy under the Alternative TAA program for older workers.

All of the following must be true for every month you wish to claim the credit:

  • You are not entitled to Medicare benefits.
  • You are not entitled to health coverage through the military health system (Veterans Affairs benefits are exempt).
  • You are not in prison.
  • You cannot be claimed as a dependent on someone’s tax return.
  • You must be enrolled in one of these health plans:
  • COBRA – so long as you are not receiving the COBRA Premium Reduction
  • Any State-qualified health plan that meets the requirements of the state’s Department of Insurance and the Trade Act of 2002.
  • Spousal coverage – in which your spouse pays more than 50% of the cost.
  • Private health insurance sold to individuals (not a group plan)

Credit for the Elderly or Disabled

This non-refundable tax credit is available to seniors that meet the following requirements:

U.S. citizens or resident aliens (special exemptions for aliens married to U.S. citizens)
Aged 65 and older, or under the age of 65, and

  • retired on a permanent and total disability
  • received taxable disability income for that year
  • did not reach mandatory retirement age on January 1st of current tax year
  • has a physicians statement certifying disability

Your adjusted gross income must be less than the following limits:

  • Single: $17,500
  • Married Filing Jointly: $20,000 with one spouse eligible, or $25,000 with both spouses eligible
  • Married Filing Separately: $12,500
  • Head of Household: $17,500
  • Qualifying Widow(er): $17,500

Free Tax Counseling for Seniors

The Federal Tax Counseling for the Elderly offers free tax assistance to seniors 60 and older. Services are rendered by trained counselors and include income tax return preparation and complimentary electronic filing. The AARP in conjunction with the federal government offers a Tax-Aide program during the busy tax season. Free counseling is available at over 7,000 locations across the country with special attention being given to seniors in need. Many local libraries will provide free tax advice during the busy season as will many community senior centers.