How to Claim the Saver's Tax Credit
The Retirement Savings Contribution Credit is a tax credit for eligible people who contribute to an individual retirement account (IRA) or an employee-sponsored retirement plan. The Saver's Credit is designed to encourage low and moderate income families to save for their retirement.
- Difficulty:
- Moderate
Instructions
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1
Determine if you are eligible to receive the saver's tax credit. Currently, to be eligible you must be over 18, you can't be a student and you can't be a dependent on another person's tax return. In addition, current income must be under a certain amount, based on your tax filing status. You can find maximum income levels on the IRS website.
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2
Obtain a copy of IRS Form 8880, Credit for Qualified Retirement Savings Contributions, from the IRS website. Or you can get this form from your tax adviser.
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3
Fill out all the information on IRS Form 8880 to calculate and claim your retirement savings tax credit. Your tax adviser can complete the form for you while completing your personal tax return.
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4
Use your calculated saver's tax credit at the end of IRS Form 8880 and enter the amount on your personal tax return. If using Form 1040, place the amount on line 51. For Form 1040A, enter the amount on line 32. And for Form 1040NR, place the amount on line 46.
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5
Continue to save for your retirement and enjoy the benefit of the saver's tax credit.
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