THE SAVER'S CREDIT NUMBERS FOR 2015

The IRS recently announced the inflation adjustments for the Retirement Savings Contributions Credit (aka Saver’s Credit) for 2015.

This credit applies to up to $2,000 in contributions to a traditional or ROTH IRA and employee contributions to a 401(k), 403(b), 457, SIMPLE or SEP plan.

 

You must be at least 18 years old at the end of the year. If you are claimed as a dependent on someone else's return or were a full-time student for any part of 5 calendar months during the year you are not eligible for the credit.  Rollover contributions (money that you moved from another retirement plan or IRA) are not eligible for the credit.

The credit is reduced by any distributions received from an IRA or employer plan during a “look-back” period.  For 2014 returns the look-back period is January 1, 2012 through the due date, including extensions, of your 2014 tax return

This is a credit – a dollar for dollar reduction of tax liability.  Depending on your income it is possible to contribute $2,000 to an IRA or employer retirement account and get $1,000 back from Uncle Sam – so the government will in effect fund 50% of your retirement savings!  Those with higher AGIs can get 20% or 10% of their retirement savings covered by the government.

If your standard or itemized deduction(s) or personal exemptions wipe out the tax liability you get no benefit from the Savers' Credit. It is not refundable, and it cannot be carried forward.

Here is a table showing the new numbers for 2015 -

 

Filing Status/Adjusted Gross Income for 2015
Amount of Credit	Married Filing Jointly	Head of Household	Single/Others
50% of first $2,000 deferred	$0 to $36,500	$0 to $27,375	$0 to $18,250
20% of first $2,000 deferred	$36,501 to $39,500	$27,376 to $29,625	$18,251 to $19,750
10% of first $2,000 deferred	$39,501 to $60,000	$29,626 to $45,750	$19,751 to $30,500

And here is the table for 2014 -

Filing Status/Adjusted Gross Income for 2014
Amount of Credit	Married Filing Jointly	Head of Household	Single/Others
50% of first $2,000 deferred	$0 to $35,500	$0 to $26,625	$0 to $17,750
20% of first $2,000 deferred	$35,500 to $38,500	$26,625 to $28,875	$17,750 to $19,250
10% of first $2,000 deferred	$38,500 to $59,000	$28,875 to $44,250	$19,250 to $29,500

     The credit is claimed on IRS Form 8880.

TTFN