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Monday December 11, 2017

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Saver's Tax Credit for Retirement

In IR-2016-171 the IRS encouraged low and middle-income taxpayers to take advantage of the Saver's Tax Credit. This credit helps workers contribute $2,000 to IRAs or 401(k) plans.

The maximum credit is $1,000 ($2,000 for married couples). In 2015 there were 7.9 million taxpayers who claimed the Saver's Credit. The total credit value was $1.4 billion.

The Saver's Credit is claimed on IRS Form 8880. There are various rules and limits. It is available for married couples with 2016 incomes up to $61,500, or single persons with incomes up to $30,750. Form 8880 also considers "filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs." The amount of the Saver's Credit will be adjusted based on these factors.

Elective contributions to retirement plans under 401(k) or 403(b) must be completed by December 31. However, the Saver's Credit and contributions to a new or existing IRA will be permitted until the filing date for your 2016 tax return (April 18, 2017).

Published December 23, 2016
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