Get a Tax Credit for Saving
It sounds crazy, but you could potentially get a chunk off your tax bill just for having contributed to your retirement plan in 2010.
Although most people are unaware of the so-called Savers Credit, according to a recent Transamerica survey, it offers a tax credit worth 10%, 20% or 50% of the first $2,000 you contributed to a retirement account (various plans qualify, including IRAs, SEPs, 401ks, 403bs, etc.), if you qualify.
The amount of the credit varies according to your filing status and income. The Savers Credit may be available to you if your 2010 adjusted gross income is not greater than:
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$55,500 if you are married and filing jointly |
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$41,625 if you are a head of household, with a qualifying person |
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$27,750 if you are single or married filing separately |
(And you must be 18 or older, not a student and can’t be claimed as a dependent on someone else’s return.)
To learn more, read the instructions for IRS form 8880 and check out this chart.
As our esteemed colleague Manisha Thakor points out, it’s potentially a triple win: If your employer offers a 401k with a match, you could gain by claiming the match, by deducting your contribution from your taxes—and by nabbing a tax credit for saving in the first place.
Take credit. What tax credits and deductions will apply to you this year?
