Here's how it works:
|Retirement Tax Credit Filing Status and AGI Limits|
|% Credit Against $2,000 Contribution|
Married Filing Jointly
|Head of Household|
|50%||Up to $15,000||Up to $30,0000||Up to $22,500|
|20%||$15,001 to $16,250||$30,001 to $32,500||$22,500 to $24,375|
|10%||$16,251 to $25,000||$32,501 to $50,000||$24,376 to $37,500|
|no credit||$25,001 or more||$50,001 or more||$37,501 or more|
The maximum tax credit is $1,000 per person. Contributions to 401Ks and IRAs both count. This is a great use of the government's money. Make at least $2,000 retirement contribution and the government will refund one up to $1,000 depending on one's income. For more details, see Form 8880, Credit for Qualified Retirement Savings Contributions and complete the form to arrive at your exact credit rate and amount.
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This is not financial advice. Please consult a professional advisor.
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