Need advice on tax credit, retirement savings? Here are six tips to help.
Your age and your income may make you eligible for tax credits if you make the right kind of payments to a retirement plan, either through your employer or a private scheme.
Six things you need to know about savers credit:
1. The Savers Credit, also called the Retirement Savings Contribution Credit, is for people with the following 2011 income:
Single people, married couples claiming separately, or widows and widowers, up to $28,250
Breadwinner up to $42,375
Married couples claiming together $56,500
2. To be able to claim you must be 18 or over, not have been a student full time in the last year, and not been named as a dependent on another return.
3. If you contribute to an eligible IRA or a 401k or another plan, you may be able to get up to $1000 credit ($2000 for a joint claim). This is calculated as a percentage of the eligible contribution. The high rates are for those with the lowest income.
4. In your calculations, you need to take off any payouts from your plan due to the contributions you’ve made. This is in the case of payouts received over the two years prior to claiming credit plus the claim year and any time remaining at the end of the claim year before the date due, including extended periods.
5. Most claimants can deduct at least some money contributed to an IRA.
6. Use form 8880 to claim your tax credit.