8/13/2019 13 Savers Tax Credit
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Talk to your tax advisor to see if you qualify.
Did you know you might be eligible for atax creditby making a
401(k) or 403(b) contribution to the plan?
Saving for one's retirement plan is not always a priority.
However, there is an added incentive to save for retirement in the
form of a non-refundable tax credit known as "the saver's tax
credit". A tax credit reduces the amount of tax you owe, unlike a
tax deduction that merelyreduces the amount of your taxable income.
A tax credit is a dollar-for-dollar reduction of taxes owed.
You may be eligible to claim a tax credit of up to $1,000 when
you make salary reduction contributions to your 401(k) plan, Simple
401(k),403(b) plan, traditional IRA, or Roth IRA.
The tax credit was created for low-income and moderate-income
savers and has been in effect since 2002. This credit applies only
as areduction to your income tax liability, not as cash in hand via
a refund. If you owe no federal income tax, you are not eligible
for a tax credit. In
order to qualify for the savers credit you must be: 18 years of
age or older, not a full-time student, and not claimed as a
dependent onsomeone elses return.
If you think you cant afford to save for retirement, think
again. Not only could contributing to your retirement plan account
at work reduce thefederal income tax that comes out of your
paycheck, you could also get back up to $1,000 when you file your
federal tax return.
Savers Credit Available to Some Taxpayers
Some taxpayers can save for retirement and earn a special tax
credit. This credit, referred to as the savers credit can offset
the first $2,000contributed to the taxpayers IRA, 401(k) and other
retirement plans.
The Savers Credit is like a rebate: Depending on your income and
tax filing status, its worth as much as 50 % of every dollar you
save forretirement (up to $2,000 for married taxpayers who each
save at least $2,000 and file jointly; up to $1,000 for
singles).
M So, what are you waiting for? Start saving for your futureand
earning your credittoday!
There is a catch. The credit is only available to taxpayers
which meet certain income criteria. The credit has been available
as a permanentfixture since 2006 but the income amounts are indexed
each year. Currently, they are:
Married Filing Jointly Head of Household Singles and Others
Savers Credit
AGI up to $35,500 AGI up to $26,625 AGI up to $17,750 50%of your
contribution
$35,501 - $38,500 $26,626 - $28,875 $17,75119,250 20%of your
contribution
$38,501 - $59,000 $28,876 - $44,250 $19,251 - $29,500 10%of your
contribution
To claim the credit, use form 8880 together with your Form 1040.
Be sure and read the instructions or consult with your tax
advisor.
If you havent already enrolled in the plan, do it now! Start
TODAY.
The Savers Tax CreditAre you saving in a 401(k) or 403(b)
Plan?
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