Retirement Savings Credit
The credit for retirement savings contributions is a nonrefundable tax
credit available to taxpayers who make eligible contributions
to a qualified IRA, 401(K), or certain other retirement plans.
The amount of the credit is a percentage of your eligible
contribution based on your filing status and modified adjusted
gross income. The maximum amount of credit is $1,000 per taxpayer
($2,000 married filing jointly).
Requirements to Claim Credit
- You made contributions to a qualified retirement plan, deferred
compensation plan, or IRA.
- You were born before January 2, 1993.
- You are not a full-time student for five or more months during
the year.
- You were not claimed as a dependent on another return.
Eligible Contributions
- Contributions to traditional or Roth IRAs
- Elective salary deferral contributions
- 401(k), including a SIMPLE 401(k)
- Section 403(b) annuity
- Any deferred compensation plan of a state or local government
(Government 457 plan)
- SIMPLE IRA
- Salary reduction SEP
- Contributions to a section 501(c)(18) plan
- Voluntary after-tax contributions to a tax-qualified retirement
plan or section 403(b) annuity
Contribution Reduction
If you received a distribution from any IRA, plan, or annuity
that qualifies as an eligible contribution in the current tax year,
previous two years, or before the due date of the current tax year
filing period, you must reduce the amount of your eligible
contribution by the amount of the distribution you received.
Distributions received by your spouse are treated as being
received by you if your filing status is married filing jointly in
the year the distribution was received and the year the
contribution was made.
Credit and Income Limitations
The maximum amount of credit is 50% (per taxpayer) of the first
$2,000 of eligible contributions.
The credit is gradually reduced as your modified adjusted gross
income increases and is completely phased out when your modified
adjusted gross income exceeds the following amounts in the 2011 tax
year:
- $28,250 for single, qualified widow(er), or married filing
separately filing statuses
- $42,375 for head of household filing status
- $56,500 for married filing jointly filing status
To claim the credit, complete Form 8880 and attach the form to
your Form 1040 or Form 1040A.
For more
information see IRS Publication 590.