Age amount is an extra credit to seniors. You qualify for age amount if you were 65 years of age or older on December 31 of the year you file your tax return.
How much is the credit?
In 2015, the full amount is $7,033 giving you a tax credit of $1,054.95. However, the age amount you are able to claim is reduced by 15% of your net income (at line 236 of your tax return) in excess of $35,466. The age amount will work out to zero at an income of $82,353. That means you are not entitled to any age amount if your net income reached $82,353 level. These amounts are indexed annually, so they change year by year.
How to claim age amount?
Age amount is claimed on line 301 on schedule 1.
An Example
John turned 65 in 2015. His net income for the year (at line 236 of his return) is $50,000. His age amount is reduced by $2,180.10 calculated by (50,000-35,466) x 15%. This means he can claim $4,852.90 ($7,033 – $2,180.10) on line 301 on schedule 1 of his tax return as his age amount. This gives him a federal tax saving of $727.94 ($4,852.90 x 15%).
Unused Age amount can be transferred to spouse
If your spouse was also 65 years of age or older and does not completely use the age amount, the unused potion of your spouse’s age amount can be available to you as additional deduction. This addition deduction is calculated on Schedule 2 and claimed on line 326. The transferred amount will not be reduced again in your hands, regardless of your income.