Still Time to Qualify for Saver’s Credit at Tax Time
The saver’s credit (not a deduction) comes in the amount of $1,000 for individuals or $2,000 for married couples, however the actual amount will be adjusted based on your filing status, adjusted gross income, and your other retirement contributions. The credit can be filled out using tax form 8880.
Available only for low and moderate income earners (qualifications are below) the saver’s credit rewards those who are taking steps to save for retirement. The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and 401(k). To be eligible for the credit, you must make voluntary contributions to your retirement plan by April 15, 2009 to set up or add money to your plan and still receive a credit. So there is still time for you to qualify for the credit!
This is not a one-time credit, because of an Act of Congress in 2006, this credit has been made permanent.
The Credit Can Be Claimed By:
- Married couples filing jointly with incomes up to $53,000 in 2008 or $55,500 in 2009;
- Heads of Household with incomes up to $39,750 in 2008 or $41,625 in 2009; and
- Married individuals filing separately and singles with incomes up to $26,500 in 2008 or $27,750 in 2009.
Other Qualifications
- Eligible taxpayers must be at least 18 years of age.
- Anyone claimed as a dependent on someone else’s return cannot take the credit.
- A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student.
- Certain retirement plan distributions reduce the contribution amount used to figure the credit. For 2008, this rule applies to distributions received after 2005 and before the due date (including extensions) of the 2008 return. Form 8880 and its instructions have details on making this computation.
for more information on the credit visit IRS web site.
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