Tax Help – Utilizing the Saver’s Credit

February 25, 2008 at 6:42 pm (tax debt help) (effectur, Saver's Credit, tax debt help, tax help)

The Retirement Savings Contribution Credit, known as the Saver’s Credit, allows you to get a credit for up to half of what you contribute to your IRA or other qualified retirement plan. Up to $2,000 of your annual contribution is eligible for the credit.

If you are Married Filing Jointly and you and your spouse make eligible contributions, both of you may claim the credit. Note: If you received a distribution from an IRA or other plan with contributions eligible for the credit, the distribution reduces the amount of your 2007 contributions that are eligible for the credit. For 2007, this applies to distributions you received during 2005, 2006 and 2007, and to distributions you will receive in 2008.

Saver’s Credit Requirements

You qualify for the Saver’s Credit if you are:

• 18 or older
  
• not a full-time student
• not claimed as a dependent on someone else’s return, and
• have an AGI that does not exceed $52,000 if Married Filing Jointly, $39,000 if Head of Household and $26,000 if Single or Married Filing Separately.

Your Maximum Saver’s Credit Amount

The Saver’s Credit is equal to a percentage of your eligible contributions. AGI and filing status determine the percentage — 10%, 20% or 50%. When calculating the Saver’s Credit, AGI includes excluded foreign income. Here’s how the income limitations break down according to filing status.

Married Filing Jointly

• $0–$31,000, 50%
  
• $31,001–$34,000, 20%
  
• $34,001–$52,000, 10%
  

Head of Household

• $0–$23,250, 50%
  
• $23,251–$25,500, 20%
  
• $25,501–$39,000, 10%
  

Single or Married Filing Separately

• $0–$15,500, 50%
  
• $15,501–$17,000, 20%
  
• $17,001–$26,000, 10%
  

IRA Contribution Deadline

You have until April 15, 2008, to start or contribute to an IRA to claim the Saver’s Credit on your 2007 tax return.