Increase Your Retirement Savings Using a Tax Credit
If you contribute to an IRA, 401(k) or any other retirement plan, you may qualify for the Saver's Credit. This can reduce your tax and help you to save for retirement. TurobTax.com reveals five interesting facts from IRS on how you can get this tax credit. The Saver's Credit is also known as the Retirement Savings Contribution Tax Credit. Married couples who are filing their tax returns jointly can get as much as $2,000. On the other hand, unmarried taxpayers can get as much as $1,000 annually.
The annual income of the taxpayer as well as their filing status is what determines whether or not they can qualify for this credit. In the 2013 tax season, you may qualify for this tax credit if you are:
Married and filing jointly with annual income not exceeding $59,000
Head of a household with annual income not exceeding $44,250
Single taxpayer or married but filing separately with annual income not exceeding $29,500
You must also:
Be at least 18 years old
Not have been a full time student in the course of the previous tax season
Not be listed as a dependent on someone else's tax return.
To claim this tax credit you must have contributed to an IRA, 401(k) or any other workplace plan before the year ended. However, any contribution made to a retirement plan before the due date may be counted as a 2013 contribution. The due date is usually the 15th of April every year.
Form 8880 is usually filed together with Form 1040 to claim this tax credit.
If you choose to eFile, the Tax software will do all the calculations on your behalf.
If you set aside some of your income for retirement, you may qualify for many other tax benefits in addition to The Saver's Credit. For instance, contributions to an IRA can be deducted.
Visit IRS.gov or TurboTax.com for more tips on this important tax credit.