You may be able to take a tax credit for making eligible contributions to your IRA or employer-sponsored retirement plan. And, beginning in 2018, if you’re the designated beneficiary you may be eligible for a credit for contributions to your Achieving a Better Life Experience (ABLE) account.
Who Is Eligible For The Credit?
You’re eligible for the credit if you’re:
- Age 18 or older;
- Not a full-time student; and
- Not claimed as a dependent on another person’s return.
See the instructions for Form 8880, Credit for Qualified Retirement Savings Contributions, for the definition of a full-time student.
Amount Of The Credit
The amount of the credit is 50%, 20% or 10% of your retirement plan or IRA or ABLE account contributions depending on your adjusted gross income (reported on your Form 1040 series return). The maximum contribution amount that may qualify for the credit is $2,000 ($4,000 if married filing jointly), making the maximum credit $1,000 ($2,000 if married filing jointly). Use the chart below to calculate your credit.
Millions of Americans forgo critical tax relief each year by failing to claim the Earned Income Tax Credit (EITC), a federal tax credit for individuals who work but do not earn high incomes. Taxpayers who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund.
Last year, an estimated 21 million taxpayers received approximately $37.5 billion in EITC. However, the IRS estimates Read More
The modern day Guru of all-things-financial, the Investing Pundit of the 21st century, Warren Buffet, has said “No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.” There is truth in this statement for all but especially for those who are in the lower income brackets, or those starting on their career paths, saving a little over time adds up!
So you just got a job or you are one of those who are thinking of starting up your retirement basket, the Internal Revenue Service (IRS) has an incentive for you. It’s called the “Saver’s Credit”. It is available to you if you contribute to a 401K or an IRA.
The credit is worth $2000 to taxpayers filing with the “Married Filing Joint” status and worth Read More