Taxpayers who contribute to a retirement plan such as a 401(k) or an IRA may be eligible for a tax credit that will help them save for retirement and reduce the amount of tax they owe. If you are a regular contributor to your retirement plan here are five facts about the Saver’s Credit from the IRS that will help you plan and save for the future.
- The Saver’s Credit is the abbreviated name for the Retirement Savings Contribution Credit. For married couples filing a joint return this credit can be worth up to $2000. For single taxpayers the credit is worth up to $1000.
- Eligibility for this credit depends on your filing status and the amount of yearly income you earn. If you fall into the following categories you may be eligible for the credit on your 2014 tax return:
- Married filing separately or single taxpayer with income up to $30000
- Head of household with income up to $45000
- Married filing jointly with income up to $60000
- Other stipulations for this credit include:
- You must be at least 18 years of age
- You can’t have been a full-time student in 2014
- You can’t be claimed as a dependent on another person’s tax return
- You must have contributed to a 401(k) plan or similar workplace plan by the end of the year to claim this credit. However you can contribute to an IRA by the due date of your tax return and still have it count for 2014. The due date for most people is April 15 2015.
- File Form 8880 Credit for Qualified Retirement Savings Contributions to claim the credit.
Keep in mind that taking advantage of the Saver’s Credit can be used in addition to other tax savings you can get if you set aside money for retirement including contributions to a traditional IRA. If you need assistance figuring out what deductions you need to take or how to get the most from your tax return let Lindemeyer CPA walk you through the process of filing taxes efficiently. Click here and a member of our tax consulting team will get back with you shortly. Lindemeyer CPA is your seasoned tax professional team.