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IRA may qualify you for a credit of up to $2,000

posted Jan 7, 2014, 10:29 PM by Zaher Fallahi

You may qualify for the Saver’s Credit of up to $1,000 ($2,000 if married filing jointly) for contributions you make to an IRA, and you have until April 15, 2014, to make IRA contributions for 2013.

 

Unlike a deduction, a credit is a dollar-for-dollar reduction of your federal income tax liability and this credit can reduce the amount you owe or increase your refund for taxes already paid.

 

Are you eligible for the credit? To claim the Saver’s Credit for 2013, you must:

1. Be age 18 or older,

2. Not be a full-time student,

3. Not be claimed as a dependent on another person’s return, and

4. Have an adjusted gross income of not more than:

 $59,000 if your filing status is married filing jointly;

 $44,250 if your filing status is head of household; or

 $29,500 if your filing status is single, married filing separately or qualifying widow(er).

 

Are your 2013 contributions eligible for the credit?

Eligible contributions include:

1. Contributions to a traditional or Roth IRA, and

2. Salary reduction contributions (including voluntary after-tax and designated Roth contributions) to your employer’s 401(k), SIMPLE IRA, SARSEP, 403(b), 501(c)(18) or governmental 457(b) plan.

 

Rollover contributions aren’t eligible for the Saver’s Credit. Your eligible contributions for the credit may be reduced by any recent distributions you received from an employer-sponsored retirement plan or an IRA.

 

Amount of the credit

The amount of the credit you can get is based on the contributions you make and your credit rate. Your credit rate can be as low as 10 percent or as high as 50 percent, depending on your income and your filing status.

If you need assistance with your accounting, payroll processing, tax planning, preparation and the IRS representation including disclosure of your undeclared foreign bank accounts, please contact the Los Angeles & Orange County CPA, Zaher Fallahi, at (310) 719-1040 (Los Angeles) or (714) 546-4272 (Orange County), or e-mail to taxattorney@zfcpa.com.

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