Savers Credit Contribute to your IRA by April 17
You may qualify for the Saver's Credit for contributions you make to an Individual
Retirement Arrangement (IRA) for 2017 on or before April 17, 2018. Unlike a deduction, a credit is a dollar-for-dollar reduction of your federal income tax liability, and this credit can reduce the amount you owe or increase your refund for taxes already paid.
Are you eligible for the credit?
To claim the Saver’s Credit for 2017:
1. You must be age 18 or older,
2. You cannot be a full-time student,
3. You cannot be claimed as a dependent on another person’s return, and
4. Your adjusted gross income cannot be more than:
• $62,000 if your filing status is married filing jointly;
• $46,500 if your filing status is head of household; or
• $31,000 if your filing status is single, married filing separately or qualifying widow(er).
Are your 2017 contributions eligible for the credit?
Eligible contributions include:
1. Contributions to a traditional or Roth IRA, and
2. Salary reduction contributions (including voluntary after-tax and designated Roth contributions) to your employer’s 401(k), SIMPLE IRA, SARSEP, 403(b), 501(c)(18) or governmental 457(b) plan.
Rollover contributions aren’t eligible for the Saver’s Credit. Your eligible contributions for the credit may be reduced by any recent distributions you received from an employer-sponsored retirement plan or an IRA.
Amount of the credit
The amount of the credit you can get is based on the contributions you make and your credit rate. Your credit rate can be as low as 10 percent or as high as 50 percent, depending on your income and your filing status.
Use Form 8880, Credit for Qualified Retirement Savings Contributions, to calculate and claim your credit..
Michael A. Khalil, CPA, MBT | 02/07/2018