Question

Discussion..Research Schedule R “Credit for the Elderly and Disabled” and whether or not it has been indexed for inflation. Include your opinion

Answer 1

Schedule R for the Elderly and Disabled is designed to provide a tax credit for citizens who are aged 65 and above and for those who are retired due to permanent disability.

The tax credit is between $3,750 to $7,500, which the person gets back in terms of credit or doesn't have to pay.

The person with disability should have a permanent disability which is limiting his participation in the workforce.

Income taxes have been adjusted as per inflation but there has been no inflation adjustment in this case, which has made the scheme less useful as increase in inflation will lead to less real benefits for the retired or disabled because suppose, the inflation rates increase by 1% to 2% every year, the credit benefit will remain same and there would be no increase in the real credit being made available which will remain constant over the years because of this discrepancy.

Thus, if the inflation is high, the person will gain a less real net benefit because 1 dollar is able to buy less goods than it was previously able to, this will ultimately lead to reduction in the standard of living or less real money being credited because of higher inflation rate.