Don’t miss out on the "saver's credit"1 min read
If you’re not sure what the “saver’s credit” is, you’re not alone. Members of the Senate Finance Committee believe many people who are eligible to claim the credit are unaware of its existence.
Here’s what you need to know:
*The saver’s credit, also called the “retirement savings contributions credit,” is a tax break designed to encourage you to make contributions to your traditional and Roth IRAs and certain other qualified retirement plans — including your 401(k).
*You apply the credit directly to your federal income tax liability, including the alternative minimum tax. The credit is nonrefundable, meaning you can use it to reduce your tax liability to zero, but no lower.
*The maximum credit is $1,000 ($2,000 if you’re married filing a joint return).
*You’re eligible if you’re not a full-time student or a dependent, are over age 18, and your 2012 adjusted gross income is less than the phase-out amount of $28,750 ($57,500 for married filing jointly). For 2013, those phase-out amounts increase to $29,500 for singles and $59,000 for joint filers.
If you’re eligible, you can take the credit and still deduct your traditional IRA contribution, which gives you the opportunity for double savings.
Additional rules might apply. For instance, the amount of the credit may be reduced by certain distributions from your retirement plans. To learn how you can obtain the maximum benefit, please contact one of the Simons Bitzer Tax Specialists at (317) 782-3070.
By Simons Bitzer
Here are a few additional articles you might be interested in:
Staff Accountant
JOB DESCRIPTION Position: Staff Accountant Department: Accounting Status: Full Time OVERALL SUMMARY OF POSITION: As a Staff Accountant, you will have the opportunity to help ensure that the firm’s clients receive high quality services on a timely basis by supporting...
Should You Elect Out of the New Partnership Audit Rules?
The Bipartisan Budget Act signed into law in 2015 and effective for partnership returns filed for taxable years beginning after 2017 has significant impacts on partnership audits. Most notably that audit adjustments are to be recognized in the year an audit is...
Senior Tax Accountant
JOB DESCRIPTION Position: Senior Tax Accountant Department: Tax Status: Full-time OVERALL SUMMARY OF POSITION: As the firm’s Tax Senior, this person will ensure that the firm’s clients receive high quality services and accurate tax returns on a timely basis along with...