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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, 1996.
  • 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)
    • 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 for the 2013 tax year:

  • $29,500 for single, qualified widow(er), or married filing separately filing statuses
  • $44,250 for head of household filing status
  • $59,000 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.