Getting Paid for Retirement Savings
What could be better than an incentive to save, in the form of a tax credit that will reduce your taxes, and in doing so, help fund your retirement contribution? Yet many eligible individuals completely miss out on the Retirement Savers Contributions Credit. You may be eligible for this if you are age 18 or older, not a full-time student, and not claimed as a dependent on another person’s tax return. Here’s how it works. Depending on your income, you will be able to directly reduce your tax bill by up to 50% of your contribution to your IRA or retirement plan, up to a maximum or $2,000 ($4,000 if filing jointly.) This credit is in addition to any tax deduction received for contributions made!
The amount of your tax credit depends on your adjusted gross income, and of course, the amount of your retirement plan or IRA contribution. Although the credit is primarily designed to incentivize lower income taxpayers, married couples filing jointly with an adjusted gross income of $61,000 can still qualify. And the credit can be taken for contributions to traditional or Roth IRAs, 401(k)s 403(b) 501(c) (18) and governmental 457(b) plans. For in depth information on income eligibility limits for this year visit https://www.irs.gov/pub/irs-pdf/p590a.pdf on “free money” through the saver’s tax credit.