Hertsel Shadian, Attorney at Law, LLC

IRS Reminds Taxpayers to Take Retirement Savings Tax Credits

6 March 2013

The IRS recently reminded taxpayers that saving for their retirement can make them eligible for a tax credit worth up to $2,000. If you contribute to an employer-sponsored retirement plan, such as a 401(k) or to an IRA, you might be eligible for the “Saver’s Credit.” Following are seven points you should know about the Saver’s Credit:

1. The Saver’s Credit is formally known as the Retirement Savings Contribution Credit. The credit can be worth up to $2,000 for married couples filing a joint return or $1,000 for single taxpayers.

2. Your filing status and the amount of your income affect whether you are eligible for the credit. You may be eligible for the credit on your 2012 tax return if your filing status and income are:

  • Single, married filing separately or qualifying widow or widower, with income up to $28,750
  • Head of Household with income up to $43,125
  • Married Filing Jointly, with income up to $57,500

3. You must be at least 18 years of age to be eligible. You also cannot have been a full-time student in 2012 nor claimed as a dependent on someone else’s tax return.

4. You must contribute to a qualified retirement plan by the due date of your tax return in order to claim the credit. The due date for most people is April 15.

5. The Saver’s Credit reduces the tax you owe.

6. You need to use IRS Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the credit (see link below). Be sure to attach the form to your federal tax return. If you use IRS e-file, the software will do this for you.

7. Depending on your income, you might be eligible for other tax benefits if you contribute to a retirement plan. For example, you may be able to deduct all or part of your contributions to a traditional IRA.

For more information about the Saver’s Credit or other retirement savings tax credits, contact your professional tax advisor or tax preparer, or contact Hertsel Shadian, Attorney at Law, LLC at (503) 352-6985. Additional information also is available in IRS Publication 590, Individual Retirement Arrangements, IRS Publication 4703, Retirement Savings Contributions Credit, and IRS Form 8880 (links below). These also are available at the official IRS website at www.IRS.gov or by calling 800-TAX-FORM (800-829-3676). Please also feel free to share this article with others that might benefit from this information.

Additional IRS Resources: