Friday, March 16, 2007

Make A Retirement Contribution - Get A Tax Credit

If you have an Adjusted Gross Income (AGI) of $50,000 or less you may qualify for the retirement tax credit. What a great deal! Deposit money to a retirement account and the government gives one money back. This is a great way to build one's retirement account early in a career.

Here's how it works:

Retirement Tax Credit Filing Status and AGI Limits
% Credit Against $2,000 Contribution

Single, Widower,
Married Filing Separately

Married Filing Jointly

Head of Household
50%Up to $15,000Up to $30,0000Up 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.

For more on Reaping the Rewards , check back every Friday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC


Dimes said...

This is my favorite credit. Ever.

Adventures In Money Making said...

do you know if this applies to the Roth IRA too?

Super Saver said...


I agree this is a great credit.


Yes, the credit also applies to Roth IRA contributions. What a great tax credit :-)