Comments on: What is the Retirement Savings Contributions Credit? Can I Claim it?

By: Natalie

Natalie — Sun, 30 Jan 2011 16:08:00 +0000

I love this credit. With a little tax planning you can get this credit even with a higher income. The key is that this credit is not based on gross income but AGI. My husband and I make almost 40k per year, but we get the 0.5 credit for income of 30k because we make large contributions to our 401k and HSA account. These come out before calculating the credit. I realized that if I contributed another 3k beyond what I was originally planning to add to my HSA I would get back another $600 from the savers credit and another $1100 from EIC. That’s a 56% return on my money!

So, even if you make more than the limits listed at the top of the page, you may still be able to take the credit if you have enough contributions to tax advantaged accounts.

By: GreenReaper

GreenReaper — Mon, 25 Oct 2010 07:41:16 +0000

It’s a nonrefundable credit, so you can only get back to $0 with it. It’s still great when you can take advantage of it, though – I got $1000 back in 2006 after starting my first full-time job at the end of 2005 and plowing all my earnings into the company’s 401k.

By: Terry Joseph

Terry Joseph — Thu, 16 Sep 2010 16:47:10 +0000

to JAMES: it is a tax credit given to you at filing time. YOU open the savings plan (roth SEP, traditional IRA) and report the contributions on form 8880. Filling out 8880 will determine the amount of the credit. You get the credit back at tax filing time provided you had some tax liability or tax withheld from paycheck, etc.

to T.V.: This credit applies to ordinary income tax and alternative minimum taxes. If you have self employment tax, or one of the other taxes shown on lines 56-60 of your 2009 1040, you still have to pay that. Perhaps that (or a similar reason) is why you’re seeing zero?

to DC: a google search turns up the stat that IRS says 5.2 million tax payers took advantage, but that’s way under the number who qualify, and since it was made permamnent in 2006 there have been efforts to promote it.

By: James

James — Thu, 03 Jun 2010 05:22:49 +0000

How it can be a credit? I thought it is a saving plan.

By: T.V.

T.V. — Wed, 03 Feb 2010 23:49:48 +0000

Are you sure it is a credit (and not a deduction?). If I owe $500 in taxes, but am eligible for a $1,000 credit from Form 8880 doesn’t it show up as $0? I fit in the brackets and am using TurboTax but so far no credit.

By: DC @ Dollar Commentary

DC @ Dollar Commentary — Thu, 21 Jan 2010 02:02:59 +0000

Wow, a pretty helpful piece of advice. It would be interesting to learn how many people who make below those levels actually save any money for retirement.

By: Robert

Robert — Tue, 19 Jan 2010 00:28:06 +0000

When I doubt, try TurboTax! That thing finds every deduction you can think of, unless you’re Donald Trump and own 500 businesses, that is.

By: Daniel

Daniel — Mon, 18 Jan 2010 19:39:26 +0000

Ah I was there until the last line! I guess that’s why they do it, so kids graduating from college can’t take advantage of it. But on the otherhand, it would be a good incentive to teach saving. Oh well.