Lesser known credit for retirement savers

Those who are saving for their retirement through IRA or an employer sponsored retirement plan, may be eligible for a “saver’s credit” in their 2014 Federal tax filing. A person over the age of 18, not a full-time student and not being claimed as a dependent on another person’s tax return is eligible for the credit. You need to use Form 8880, Credit for Qualified Retirement Savings Contributions to claim the credit and file Form 1040 or Form 1040A.

The amount of credit is 50%, 20%, or 10% of the contribution you made to an IRA or retirement plan up to maximum of $2,000 for single and $4,000 for a married couple filing jointly. Not everyone will qualify for the credit. For 2014, 50% credit is available for those who earned less than $36,000 (married filing joint), $27,000 (for Head of Household), $18,000 AGI for all other filers. For 20% credit limits are $36,000 to $39,000, $27,001 to $29,250, and $18,001 to $19,500 respectively. Married joint filers with AGI of $39,001 to $60,000, Head of Household with $29,251 to $45,000 and all others with $19,501 to $30,000 will get a 10% credit for their contributions. Income limits have been slightly increased for 2015.