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Retirement Savings Contributions Credit


An individual may be able to take a tax credit of up to $1,000 ($2,000 if filing jointly) for making eligible contributions to an IRA or employer-sponsored retirement plan.

Who is eligible for the credit?

The individual claiming the credit must be:

  • Age 18 or older;
  • Not a full-time student;
  • Not claimed as a dependent on another person’s return; and
  • With an adjusted gross income not more than:
    • $57,500 if your filing status is married filing jointly (for 2012; $59,000 for 2013),
    • $43,125 if your filing status is head of household (for 2012; $44,250 for 2013), or
    • $28,750 if your filing status is single, married filing separately, or qualifying widow(er) (for 2012; $29,500 for 2013).

Retirement plan contributions eligible for the credit

Eligible contributions include:

  • Contributions to a traditional or Roth IRA,
  • Elective deferrals (including after-tax Roth contributions, if available) to a:
    • 401(k) plan (including a SIMPLE 401(k) and the federal Thrift Savings Plan),
    • SIMPLE IRA plan
    • SARSEP
    • 403(b) annuity
    • governmental 457(b) plan
  • Contributions to a §501(c)(18) plan, and
  • Voluntary after-tax employee contributions to a qualified retirement plan or 403(b) annuity. For purposes of the credit, employee contributions will be voluntary as long as they aren’t required as a condition of employment.

Rollover contributions aren’t eligible for the Saver’s Credit. Also, your eligible contributions may be reduced by any recent distributions you received from a retirement plan or IRA.


Amount of the credit

The amount of the credit you can get is based on the contributions you make and your credit rate. Your credit rate can be as low as 10% or as high as 50%. Your credit rate depends on your income and your filing status.


Contribution Reduction

If you received a distribution from any IRA, plan, or annuity that qualifies as an eligible contribution in the current tax year, previous two years, or before the due date of the current tax year filing period, you must reduce the amount of your eligible contribution by the amount of the distribution you received.

Distributions received by your spouse are treated as being received by you if your filing status is married filing jointly in the year the distribution was received and the year the contribution was made.


Forms

8880 – Retirement Savings
Publication 4703 – Retirement Savings

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