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The Internal Revenue Service reminds low-and moderate-income workers to plan to now earn a credit on their 2017 tax return. A special tax abreak can help people with modest incomes save for retirement. It's call the Saver's Credit and it could mean up to 50 percent credit for the first $2000 a taxpayer contributes to a retirement plan.
Also known as the Retirement Savings Contributions Credit, the Saver's Credit helps offset amounts workers voluntarily contribute to a traditional or Roth IRA,, a 401(k), or 403b plan and similar workplace retirement programs.
Taxpayers with an IRA have until April 17, 2018, (the due date of their tax return) to contribute to the plan and still have it qualify for 2017. However, contributions to a employer-sponsored plan must be made by the end of the year to qualify for the credit. Employees who are unable to set aside money for this year may want to schedule ttheir 2018 contributions so their employer can start withholding in January.
The Saver's Credit can be claimed by:
* Married couple filing jointly with incomes up to $63,000 in 2017 or $63,000 in 2018.
* Head of Households with incomes up to $46,500 in 2017 or $47,250 in 2018.
* Singles and married individuals filing separately with incomes up to $31,000 in 2017 or $31,500 in 2018.
To qualify for the credit a person must be:
* Age 18 or older
* Not a full-time student
* Not claimed as a dependent on another persons tax return
Though the maximum credit is $1,000 ($2,000 for married couples), the IRS warns that could be much less or may be zero for some taxpayers.
To claim the Saver's Credit taxpayers must complete Form 8880 and attach it to their tax return,. Form 8880 cannot be used with Form 1040EZ