Q. How much is the disability credit/deduction/exemption? and again is it applicable for standard deduction?
A. The Federal Credit (not a deduction or exemption) for the Elderly or Disabled is 15% of your Modified Adjusted Gross Income*, but not more than your calculated tax. Since it is a credit, you get it even if you use the standard deduction.
Q. (Original question) Do I qualify for the permanent disability tax credit?
A. There is a credit for the elderly or disabled (you don't have to be both). But because it has not been adjusted for inflation since 1983, very very few people qualify. If you qualify, TurboTax (TT) will automatically calculate it. It goes on Schedule 3, line 6d (2021). It is not a refundable credit. That is, you must have a tax liability to offset to get the credit. Very few people, with that little income have an actual tax to offset.
Having any social security income works against you. Essentially your potential credit is reduced by any tax you "shoulda paid” on the untaxed Social security income. If you have more than $5000 social security ($7500 Married Filing Jointly and both are elderly or disabled), or VA benefits, you will not qualify for the credit.
If you think you qualify, and TT missed it, In TurboTax (TT), enter at:
Federal Taxes Tab
Deductions & Credits
-Scroll down to:
--Other deductions & Credits
-Elderly or Disabled credit
A simplified rule of thumb is: if you have earned a social security benefit, including SSDI, you won't qualify for the Credit for the Elderly and Disabled.
* See schedule R for calculation of the credit and Modified Adjusted Gross Income (it's complicated).
https://www.irs.gov/pub/irs-pdf/f1040.pdf
