Did you know that starting to plan for retirement now could earn you a credit on your 2017 tax return?
If you or someone you know has a modest income, a special tax break can help you out to save for retirement, called the “Saver’s Credit”. It could mean up to a 50% credit for the first $2,000 a taxpayer contributes to a retirement plan. This credit helps offset part of the amount workers voluntarily contribute to traditional or Roth IRA, or other retirement programs.
If you have an IRA, you have until April 17th, 2018 to contribute to the plan and have it qualify for 2017. But the contributions must be made by the end of the year to qualify for the credit.
You can claim the Saver’s Credit by:
-If you are married, file jointly with incomes up to $62,000 in 2017
-Heads of Household with incomes up to $46,500 in 2017
-Singles and married individuals filing separately with incomes up to $31,000 in 2017
You must be the following to qualify:
-Age 18 or older
-Not a full-time student
-Not claimed as a dependent on another person’s tax return
The Saver’s Credit can increase a taxpayer’s refund or reduce the amount of tax owed, with the maximum amount at $1,000. The amount is based on filing status, income, liability for taxes, and the amount you contribute to a qualifying retirement plan. To claim this credit, you must complete Form 8880.
Plan for later, save now.