Planning for the future can be a good investment, whether you decide to build a savings fund through an IRA or 401(k) plan, there is a chance that you may qualify for tax credits. For tax payers with qualifying savings plans you may be eligible for The Savers Credit, which can help reduce your tax liability. This credit also known as, The Retirement Savings Contribution Credit can provide a maximum tax benefit of up to $2,000 for married couples who file jointly and $1,000 for single tax payers.
You’re filing status and annual income will determine if you are eligible for the credit. For 2014 the following items will help determine if you can take The Savers Credit
Married Filing Separately or Single filing taxpayers who have not earned more than $30,000 for the tax year.
Head of Household can have a maximum annual income of up to $45,000.
Couples who use Married Filing Jointly may have a combined income of up to $60,000.
There are additional rules that may affect your eligibly for The Savers Credit. You cannot be considered a full-time student and must be above the age of 18 years old. You cannot be claimed as a dependent on some one else’s tax return.
In order to claim the benefit on your taxes you must have actually put money in a qualified retirement savings such as a 401(k) before the end of 2014. If you contribute to an IRA you are eligible to claim credit for any deposits up until the tax filing due date, which is usually April 15, 2015.
To claim the credit you will have to file a Form 8880, Credit for Qualified Retirement Savings Contributions. If you file your taxes electronically most programs will do this for you.
You may also be able to deduct contributions made to traditional IRA’s as well. The Savers Credit is one of many ta savings that can help offset the cost of saving for your retirement.
