Wouldn’t it be nice to have Uncle Sam chipping in for your retirement? Low and moderate income taxpayers can actually grab this perk. All they need to do is take advantage of the saver’s credit (also known as the retirement savings contributions credit), a special tax credit that helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans. This credit is in addition to any other tax savings that apply. In order to ensure credit for 2011, contributions must be made before the deadline of April 17, 2012. Employees who are tight on cash at year end may want to schedule their 2012 contributions soon so their employer can begin withholding them in January. The 2011 income limits to be eligible are as follows:
- Married couples filing jointly: $56,500
- Head of Household: $42,375
- Married filing separate or single: $28,250
Other rules that apply to the saver’s credit include the following:
- Eligible taxpayers must be 18 years old
- Anyone claimed as a dependent on someone else’s return cannot take the credit
- A student cannot take the credit. Enrollment in full-time study for any part of 5 calendar months during the year deems one “a student”.