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Did you know you can get credit for your retirement savings contributions

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Real Estate Agent with Re/Max 100

Get Credit for Your Retirement Savings Contributions 

You may be eligible for a tax credit if you make eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement.  Here are six things the IRS wants you to know about the Savers Credit:

1. Income Limits The Savers Credit, formally known as the Retirement Savings Contributions Credit, applies to individuals with a filing status and income of:
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 incomes up to $55,500

2. Eligibility requirements To be eligible for the credit you must have been born before January 2, 1992, you cannot have been a full-time student during the calendar year and cannot be claimed as a dependent on another person's return.

3. Credit amount If you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans, you may be able to take a credit of up to $1,000 or up to $2,000 if filing jointly. The credit is a percentage of the qualifying contribution amount, with the highest rate for taxpayers with the least income.
4. Distributions When figuring this credit, you generally must subtract the amount of distributions 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 - for filing the return for the credit year.

5. Other tax benefits The Retirement Savings Contributions Credit is in addition to other tax benefits which may result from the retirement contributions. For example, most workers at these income levels may deduct all or part of their contributions to a traditional IRA. Contributions to a regular 401(k) plan are not subject to income tax until withdrawn from the plan.

6. Forms to use To claim the credit use Form 8880, Credit for Qualified Retirement Savings Contributions.

For more information, review IRS Publication 590, Individual Retirement Arrangements (IRAs), Publication 4703, Retirement Savings Contributions Credit, and Form 8880. Publications and forms can be downloaded at http://www.irs.gov or ordered by calling 800-TAX-FORM (800-829-3676).

 

from irs.gov

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Regards,  

Indera Coggins(R)
Certified Distressed Property Expert
301-481-0787 (cell)
410-423-1753 (fax)
inderac@gmail.com
www.inderacoggins.com 

Comments (3)

Victor Zuniga
Berkshire Hathaway Home Services California Properties - San Diego, CA

This is probably the best way to reduce your taxes and get something out of it for yourself. Granted you can't touch the money till later in life but that's okay.

Feb 23, 2011 08:03 AM
Indera Coggins
Re/Max 100 - Dunkirk, MD

Victor, exactly, you can't touch it early without paying a penalty but there is that credit which can be beneficial to many.

Have a great day!

Feb 23, 2011 08:10 AM
Ann Hayden 636-399-7544
Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri - Des Peres, MO
SelectAnn.com

Indera,

Always nice to know about the tax deductions available!

Ann Hayden in Wildwood, MO

Feb 24, 2011 12:44 PM