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Retirement Savings Contribution CreditForm 8880 & Instructions (PDF)IRS Tax Topic 610Saver's Credit Details from Publication 590 More Tax Credits and DeductionsSaving for RetirementIndividual Retirement AccountsAll About 401K PlansRetirement Planning Retirement Savings Contribution CreditThe Savers Credit Can Lower Your Taxes While You Save for RetirementIndividuals who save for retirement may qualify for a federal tax credit. The Retirement Savings Contribution Credit, or the Saver's Credit for short, is a federal tax credit designed to encourage low- and modest-income individuals to save for retirement.
The credit is a percentage of savings, from 10% to 50%. The credit also depends on your overall income and filing status.
Qualifying for the Retirement Savings Tax CreditYou qualify for the Saver's Credit if
Income LimitsThe income limits for the saver's credit depends on your filing status:
Dollar Amount of the Saver's CreditThe tax credit is calculated based on a percentage of your retirement contributions up to $2,000. The percentage is determined by your adjusted gross income and your filing status.The percentage of contributions you get as a tax credit is 10%, 20%, or 50%, depending on your adjusted gross income. You can contribute to just about any kind of retirement plan, such as 401(k), traditional IRA, Roth IRA, SEP-IRA, SIMPLE IRA, the federal Thrift Savings Plan, or 503(b) plans.
Consider a Roth IRA if You QualifyIf you qualify for the Retirement Savings Tax Credit, consider contributing to a Roth IRA. With a Roth, your contributions enjoy tax-free growth and you won't have to include the Roth distributions in your taxable income when you retire. A Roth plus the saver's credit is a very tax-efficient combination.Claiming the Saver's CreditTo claim the credit, you will need to fill out Form 8880 (PDF) and attach it to your Form 1040A or 1040.Retirement Savings Contribution CreditForm 8880 & Instructions (PDF)IRS Tax Topic 610Saver's Credit Details from Publication 590 More Tax Credits and DeductionsSaving for RetirementIndividual Retirement AccountsAll About 401K PlansRetirement Planning |
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