2014 Credit for Qualified Retirement Savings Contributions
Roy Clark
by Barry L Weller, EA
This tax credit helps low and moderate-income workers save for retirement by giving a federal tax credit to qualifying individuals when they contribute to a Traditional or Roth IRA or a workplace retirement program including 401(k), 403(b), governmental 457, SEP and SIMPLE plans.
Eligible workers have until April 15, 2015, to set up a new individual retirement arrangement or add money to an existing IRA for 2013. However, elective deferrals/contributions must be made by the end of the year to qualified workplace retirement plan.
This saver’s credit can be claimed by:
• Married couples filing jointly with incomes up to $60,000 in 2014 or $61,000 in 2015
• Heads of Household with incomes up to $45,000 in 2014 or $45,750 in 2015
• Married individuals filing separately and singles with incomes up to $30,000 in 2014 or $30,500 in 2015.
The maximum saver’s credit is $1,000 for single individuals and $2,000 for married couples filing jointly. A taxpayer’s credit amount is based on his or her filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs.
Other special rules that apply to the saver’s credit include the following:
• Eligible taxpayers must be at least 18 years of age.
• Anyone claimed as a dependent on someone else’s return cannot take the credit.
• A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student.
This credit was first available in 2002 as a temporary provision. The saver’s credit was made a permanent part of the tax code in legislation enacted in 2006. To help preserve the value of the credit, income limits are adjusted annually to keep pace with inflation.
Barry L Weller, EA is the president of Barry Weller & Associates with offices at 216 E Philadelphia Ave, Boyertown, PA 19512. Phone (610) 367-8280 He is an enrolled agent, licensed to represent taxpayers before the IRS. Revised 10/27/2014