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Who Qualifies for the Retirement Savers’ Tax Credit?

This break is aimed at lower-income savers, but you may be eligible if you have joint income as high as $61,000.

I contributed to a 401(k) through my job last year. How do I know whether I qualify for the retirement savers' tax credit on my 2015 tax return?

See Also: Retiree Tax Map

The retirement savers' credit is a frequently overlooked tax break (see our full roundup of the Most-Overlooked Tax Deductions) that provides extra incentive to save for retirement, especially when your income is low. The credit is worth up to $1,000 per person, or $2,000 for married couples, and is based on your income and the amount you contributed to a retirement-savings account, such as a traditional or Roth IRA, myRA, 401(k), 403(b), 457, federal employees' Thrift Savings Plan, Simplified Employee Pension or SIMPLE plan.

The amount of the credit depends on your income; see our table below. Contributions of up to $2,000 count in the calculation for each person ($4,000 for married couples), making the maximum credit worth $1,000 per person (or $2,000 for married couples).

Filing Status 2015 Taxable Income Tax Credit
Single less than $18,250 50% (of contributions up to $2,000 per person or $4,000 for married couples)
Head of Householdless than $27,375
Married, Filing Jointlyless than $36,500
 
Single$18,250 - $19,750 20% (of contributions up to $2,000 per person or $4,000 for married couples)
Head of Household$27,375 - $29,625
Married, Filing Jointly$36,500 - $39,500
 
Single$19,751 - $30,500 10% (of contributions up to $2,000 per person or $4,000 for married couples)
Head of Household$29,626 - $45,750
Married, Filing Jointly$39,501 - $61,000

You can qualify for the credit if you are 18 or older, not a full-time student and not claimed as a dependent on another person’s return.

To claim the credit, file Form 8880, Credit for Qualified Retirement Savings Contributions, with your 2015 tax return. The amount you contributed to your employer's 401(k) in 2015 should be listed in box 12 of your W-2.

You can receive this credit in addition to any other tax breaks for your contributions, such as pretax contributions to a 401(k) or tax-deductible contributions to a traditional IRA.

If you discover that you would have qualified for the credit in previous years but didn't claim it on your tax return, you can file an amended return and receive a refund. You have up to three years after the date you filed your original return to file Form 1040X amending your return. See How to Claim Overlooked Tax Breaks from Previous Years for more information.

See Also: 15 Most Tax-Friendly States for Retirees

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