A Reward for Saving

Taxpayers may be eligible for a Retirement Savers Credit of up to $1,000 ($2,000 for married couples filing together) for making eligible contributions to an:

• Employer-sponsored retirement plan such elective deferrals to a 401(k), 403(b), 457, SEP or SIMPLE plans
• Voluntary contributions to qualified retirement plans
• IRA

The credit is a percentage of the contributions based on their Modified AGI (list is below) which may be reduced by taxable distributions made from 2008 and the due date of the tax return - including extensions.

Taxpayer cannot claim the credit if:

• Under age 18 at the end of the year
• Claimed as a dependent on another person's return
• A full-time student during the year

Must include Form 8880 with your tax return and enter the credit on line 50 of Form 1040.

The Retirement Savings Contributions Credit is in addition to other tax benefits which may result from the retirement contributions. For example, most workers at these income levels may deduct all or part of their contributions to a traditional IRA. Contributions to a regular 401(k) plan are not subject to income tax until withdrawn from the plan.

For more information, refer to IRS Publication 590.

Married Filing Jointly
50% credit up to $33,500 (up from $33,000 in 2009)
20% credit over $33,500 up to $36,000 (from $33,000)
10% credit over $36,000 and up to $55,500 (same)
0% credit over $55,500 (same)

Head of Household
50% credit up to $25,125 (up from $24,750 in 2009)
20% credit over $25,125 up to $27,000 (from $24,750)
10% credit over $27,000 and up to $41,625 (same)
0% credit over $41,625 (same)

Single, Qualifying Widower and Married Filing Separately
50% credit up to $16,750 (up from $16,500 in 2009)
20% credit over $16,750 up to $18,000 (from $16,500)
10% credit over $18,000 and up to $27,750 (same)
0% credit over $27,750 (same)