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The Saver’s Credit…Are You Eligible?

by admin on July 16, 2015

Retirement_Savings_PlanHave you heard of the “Saver’s Credit”? You may have heard it called by its formal name- Retirement Savings Contribution Credit. This credit allows low-to-moderate income workers to save two ways for the same amount.

We have listed 6 tips you should know about this credit:

  1. Save for retirement. You may be able to claim this tax credit in addition to any other tax savings that also apply. The saver credit helps offset part of the first $20,000 you voluntarily save for your retirement. This includes amounts you contribute to IRAs, 401(k) plans and workplace plans.
  2. Save on taxes. This credit can increase your refund or reduce the tax you owe. The maximum credit is $1,000 or $2,000 for married couples.
  3. Income limits. Limits vary depending on your filing status. You may be able to claim the saver’s credit if you are a :
    • Married couple filing jointly with an income of up to $60,000 in 2014 or $61,000 in 2015.
    • Head of household with income up to $45,000 in 2014 or $45,750 in 2015.
    • Married person filing separately or single with income up to $30,000 in 2014 or $30,5000 in 2015.
  4. When to contribute. If you are eligible, you have until April 15, 2015 to set up a new IRA or add money to an existing one for 2014. You must make an elective deferral contribution by the end of the year to a 401(k) or similar workplace plan.
  5. Special rules apply. There are 3 special rules that apply to the credit:
    • You must be at least 18 years of age.
    • You cannot have been a full-time student in 2014.
    • Another person cannot claim you as a dependent on their tax return.

Contact Person Huff CPA Group ( 504-780-8299) to figure your credit amount based on your filing status, adjusted gross income, tax liability and the amount of your qualified contribution.

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