Did you know there is a new government program that will allow you to save for retirement? The Retirement Savings Contributions Credit allows for up to a $1,000 credit for single individuals and $2,000 credit for married couples for contributions made to 401(k) or IRA programs during the 2010 tax year. The plan is available for those workers who are 18 years of age or older and who meet the following income guidelines:
• Filers who are single or married filing separately, with adjusted gross income of $27,750 or less in 2010
• Filers who are the head of a household and have made less than $41,625 in 2010
• Filers who are married and filing a joint return and have a combined income of less than $55,500 in 2010
If you are eligible, here are some helpful tips for claiming your credit:
• If you use tax preparation software for your tax returns, you should use Form 1040A, Form 1040 or Form 1040NR. The credit is not available with Form 1040EZ. Be sure to watch for and answer questions that refer to the saver’s credit, retirement savings contributions credit and/or credit for qualified retirement savings contributions.
• If you prepare your tax returns manually, you should complete Form 8880, Credit for Qualified Retirement Savings Contributions, to determine the credit rate and amount. Transfer the amount to the designated line on Form 1040A, Form 1040 or 1040NR.
• If you use the services of a professional tax preparer be sure to ask about the saver’s credit.
Additional online information can be found on the IRS website.