Tax Credit for Retirement Savings Contributions
Guess what? If you’re single and your adjusted gross income (AGI) is $25k or less ($50k for married couples), then you’re entitled to a credit of 10-50% on up to $2,000 in contributions to qualified retirement savings plans. Eligible plans include 401(k) and 403(b) plans as well as traditional and Roth IRAs. This credit comes in addition to the tax deduction that you get for making the contributions (except on the Roth, for which contributions aren’t tax deductible). Free money in return for saving for your retirement is a fantastic deal — if you qualify, you should definitely try to take advantage of it. For more information on figuring your credit, which goes on line 51 of Form 1040, see IRS Form 8880.