Excel Tax and Consulting Services
Above and Beyond
We Have Moved!
|Posted on November 26, 2015 at 12:35 AM|
Low to middle income taxpayers who contribute to a retirement plan may be able to take the Retirement Savings Contributions Credit or Saver's Credit, for short. This credit is taken on form 8880 and is worth 10%-50% of your eligible contributions to IRAs and other retirement plans up to a maximum credit of $1000 ($2000 on a Married Filing Joint Return). This credit is based on the smaller of eligible contributions or $2000 per taxpayer. The credit rates vary based on your Modified Adjusted Gross Income.
Those under the age of 18, claimed as a dependent on another person return, or was a full time student during any part of 5 calendar months of the year.
Contributions considered for the credit include: 1) Traditional and Roth IRA contributions, 2) Elective deferrals to a 401k, 403b, governmental 457, SEP, or SIMPLE plans. 3)Voluntary employee contributions to a qualified retirement plan defined in the IRC section 4974c which includes the Federal Thrift Savings Plan, 4) Contributions to a 501c18d plan.
The most common plans are the IRAs, both Traditional and Roth, 401K and 403B plans. The items in box 12 of your W2 will show amounts to a qualified plan.
Your contributions may need to be reduced by certain items such as distributions from any of the above plans. This is an area where we advise you to see your tax professional so that the correct amounts are used on your return since there are some items that you do not need to reduce your contributions by. Maximumizing your credit is what your knowledgeable tax professional can do!
Modified Adjusted Gross Income:
Modified Adjusted Gross Income is different for many tax credits. In reference to the Saver's Credit this means your income from line 37 on form 1040 (2014) + excluded income from Puerto Rico+lines 45 or 50 from form 2555 (foreign income)+line 15 form 4563 (american Samoa residents).
The above link takes you to the IRS.GOV website with charts for the upcoming filing season pertaining to the Saver's Credit.
Excel Tax and Consulting Services suggest seeking tax advice from reputable, knowledgeable tax professionals such as Enrolled Agents and CPAs. Our doors are always open for all clients new and returning. Call or Stop by today! Or visit us on FaceBook http://www.facebook.com/exceliowa
Happy Thanksgiving from all of us at Excel Tax and Consulting Services!