News Column

IRA contributions may warrant tax credits

February 22, 2014

By Paula Burkes, The Oklahoman, Oklahoma City



Feb. 22--Q: What is the Saver's Credit and who's eligible?

A: You may be able to take a tax credit for making eligible contributions to your IRA (individual retirement account) or employer-sponsored retirement plan if your adjusted gross income is $29,500 or under; $44,250 if you're head of household or $59,000 if you're married filing jointly. You are eligible for the credit if you're: age 18 or older, not a full-time student and not claimed as a dependent on another person's return.

Q: What form does a taxpayer use to claim the credit?

A: Taxpayers who are eligible for the credit should complete Form 8880 -- Credit for Qualified Retirement Savings Contributions -- and see the instructions for this form. This form can be downloaded from irs.gov. Be sure to read the definition of a full-time student.

Q: What is the amount of the credit?

A: The amount of the credit is 50 percent, 20 percent or 10 percent of your retirement plan or IRA contributions up to $2,000 ($4,000 if married filing jointly), depending on your adjusted gross income which is reported on Form 1040 or 1040A.

Q: What else should taxpayers know?

A: The Saver's Credit can be taken for your contributions to a traditional or Roth IRA; your 401(k), SIMPLE IRA, SARSEP, 403(b), 501(c)(18) or governmental 457(b) plan; and your voluntary after-tax employee contributions to your qualified retirement and 403(b) plans. Rollover contributions aren't eligible for the Saver's Credit. Also, your eligible contributions may be reduced by any recent distributions you received from a retirement plan or IRA.

Q: Any additional resources?

A: Taxpayers who are interested in learning more about the Saver's Credit are encouraged to review Publication 590 -- Individual Retirement Arrangements (IRAs) and Publication 4703 -- Retirement Savings Contributions Credit. Both of these publications are available on irs.gov.

PAULA BURKES, BUSINESS WRITER

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Source: Daily Oklahoman (Oklahoma City)


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