TaxBizPro, LLC posted on March 19, 2010 09:04
This material was prepared by TaxBizPro, LLC ©: 2010
If you would like to contribute to a qualified retirement plans such as 401-K, 403-B, 457, SEP, SIMPLE IRA, KEOGH, IRA, or other qualified retirement plans, you may be eligible for a tax credit known as Retirement Savings Contributions Credit.
But not everybody will qualify for this credit. Here are some facts that you need to know:
1. If you make over the income limits that are set by the IRS every year, the credit will be phased out or not allowed. Below are the 2009 limits. (These amounts are adjusted annually)
- Single, married filing separately, or qualifying widow(er), with income up to $27,750
- Head of Household, with income up to $41,625
- Married Filing Jointly, with income up to $55,500
2. To be eligible for this Savers Tax Credit you must have been born before January 2, 1992, you cannot be a full-time student during the calendar year, and you cannot be claimed as a dependent on someone else’s individual income tax return.
3. If you make eligible contributions to a qualified retirement plan, you may be able to take a credit of up to $1,000 or up to $2,000 if filing jointly.
4. When figuring this credit, you generally must subtract the amount of distributions (money withdrawn) you have received from your retirement plans from the contributions you have made. This rule applies to distributions received in the two years before the year the credit is claimed, the year the credit is claimed, and the period after the end of the credit year but before the due date - including extensions.
5. The Retirement Savings Contributions Credit is an additional credit to you, even though you also have deducted your retirement contribution to an IRA or other qualified retirement plans.
6. To claim the credit use Form 8880*, Credit for Qualified Retirement Savings Contributions.
*Links: