For many people, saving for retirement is burdensome, especially when you have existing living expenses and debts to cover. Shockingly, the IRS does provide individuals with some incentive to save for their retirement. The retirement plan contribution expense credit is designed primarily for moderate and lower-income individuals, and it may be able to help you start saving for retirement.
Formerly known as The Saver’s Credit, the credit provides those who save for retirement with a number of unique and useful tax breaks. Unlike a tax deduction, the retirement credit can reduce your tax liability dollar-for-dollar, but it cannot completely eliminate your tax balance. You may be eligible for the tax break credit if the following applies to you:
The tax credit amount will equal 10, 20, or 50 percent of your overall contributions, and the IRS will also take your adjusted gross income into account. Taxpayers with lower incomes will notice a greater payoff, and you must have earned $31,500 or less during the past year. The credit maximum is $2,000 for single individuals and $4,000 for married individuals filing jointly.
To get the Saver’s Credit, you will need to complete Form 8880, regardless of whether you have completed an EIN number application. You may not use the form if you intend to use the 1040EZ to file taxes.
Saving for retirement may not be fun, but with the right tax credit, it can be a bit easier. Here at GovDocFiling, we understand you may need more guidance than just a tax ID example, and that is why we are here to assist you with your filing needs. Find out if you qualify for the Saver’s Credit today by filling out this online contact form.