20 August 2010
Another reason to save for retirement

If you make contributions to a traditional or Roth IRA, elective deferrals to a 401(k), 403(b), governmental 457, SEP, or SIMPLE plan, voluntary employee contributions to a federal Thrift Savings Plan, or contributions to a 501(c)(18)(D) plan, you may qualify for a Credit for Qualified Retirement Savings Contributions (saver’s credit).

The credit equals a percentage of your eligible contributions (up to $2,000). The percentage varies from 10, 20, or 50 percent depending on your adjusted gross income and filing status. Thus, the maximum credit is $1,000 ($2,000 x 50%). For 2010, the saver’s credit is available if your adjusted gross income does not exceed:
  • $55,500 on a joint return.
  • $41,625 on a head of household return.
  • $27,750 on all other returns.

In addition, your eligible contributions must be reduced by any taxable distributions received after 2007 and before the due date of the 2010 return (including extensions) from any plan to which eligible contributions may be made. Keep this in mind if you qualify for the saver’s credit and are thinking of taking a distribution from one of these plans.

Saver's Credit Requirements
You qualify for the Saver's Credit in 2009 if you are:
  • 18 or older
  • Not a full-time student
  • Not claimed as a dependent on someone else's return, and
  • Have an AGI that does not exceed $55,500 if Married Filing Jointly, $41,625 if Head of Household and $27,750 if Single, Married Filing Separately or Qualifying Widow(er).

Your Maximum Saver's Credit Amount
The Saver's Credit is equal to a percentage of your eligible contributions. AGI and filing status determine the percentage — 10%, 20% or 50%. When calculating the Saver's Credit, AGI includes excluded foreign income. Here's how the income limitations break down according to filing status for the 2010 tax year.

Married Filing Jointly
$0–$33,500, 50%
$33,001–$36,000, 20%
$36,001–$55,500, 10%

Head of Household
$0–$25,125, 50%
$24,751–$27,000, 20%
$27,001–$41,625, 10%

Single, Married Filing Separately or Qualifying Widow(er)
$0–$16,750, 50%
$16,501–$18,000, 20%
$18,001–$27,750, 10%

2010 Contribution Limits Under Age 50 Over Age 50
IRA $5,000.00 $6,000.00
401(k) $16,500.00 $22,000.00
SIMPLE $11,500.00 $14,000.00







You have until April 15, 2011, to start or contribute to an IRA to claim the Saver's Credit on your 2010 tax return.
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Topic: Credits and Deductions