Ian and Jolene are ages 70 and 72,respectively,and file a joint return.They have AGI of $15,000 and received $1,000 in nontaxable social security benefits.How much can Ian and Jolene take as a credit for the elderly or the disabled?
A)$225.
B)$600.
C)$1,000.
D)$2,250.

Question

Quizplus · Accepted Answer

The credit for the elderly or the disabled is calculated as a percentage of the taxpayer's adjusted gross income (AGI), with a maximum credit amount. For taxpayers who are 65 and older, the credit is generally 15% of the first $5,000 of AGI, but the credit is gradually reduced as AGI increases. In this case, Ian and Jolene's AGI is $15,000, which means they are eligible for the maximum credit amount of $1,125 ($7,500 x 0.15). However, the nontaxable social security benefits they received of $1,000 must be subtracted from the maximum credit amount, leaving them with a credit of $125. Since the credit is nonrefundable, it can only reduce their tax liability to zero but cannot result in a refund. The closest option is B, which is $600, so that is the best choice.

Ian and Jolene Are Ages 70 and 72,respectively,and File a Joint