Tax Tip: Get Credit for Contributions to Retirement Savings Plans

If you participate in an employer-sponsored retirement plan or an individual retirement plan, you may be eligible for a tax credit.
This credit used to be known as the Retirement Savings Contributions Credit (RSCC). It is now known as the Savers Credit and applies to individuals that meet the following income and filing status:
• Income of up to $26,000 and single filing status
• Income of up to $39,750 and Head of Household filing status
• Incomes of up to $53,000 and Married Filing Jointly filing status
Other criteria to be eligible are at least 18 years of age, not a full-time student and cannot be claimed as a dependent on another person’s tax return.
Contributions to a qualified 401(k), IRA, and other eligible retirement plans, will allow you to take a credit of up to $1,000 for single status or up to $2,000 if filing jointly. This credit is based on a percentage of the qualifying contribution amount.
In order to calculate this credit, you must first subtract the amount of any distributions received from the retirement plans from the contributions you have made. This applies to distributions starting two years before the year the credit is claimed and ending with the filing deadline for the tax year.

The RSCC is in addition to other tax benefits which may result from the retirement contributions. The following forms may be found a :
• Form 8880, Credit for Qualified Retirement Savings Contributions
• Form 1040, U.S. Individual Income Tax Return
• Form 1040A, U.S. Individual Income Tax Return
• Publication 590, Individual Retirement Arrangements (IRA)