A:

The saver's tax credit is a non-refundable tax credit available to eligible taxpayers in the U.S. who make contributions to their employer-sponsored 401(k), 403(b), SIMPLE, SEP or governmental 457 plan and/or make contributions to their Traditional and/or Roth IRAs. The saver's tax credit is claimed when you file your tax return for the year.

If your tax return is prepared by a professional, remind him or her that you are eligible for the credit and that he or she must file IRS Form 8880, which is available at the IRS website. If you file your own return, you should complete the form and attach it to your tax return. The credit amount is indicated on the line labeled "retirement savings contributions credit", in the "tax and credits" section of your tax return.

To learn more about taxation and retirement plans, read The Saver's Tax Credit: An Added Incentive To Fund Your Plan, Avoiding IRS Penalties on Your IRA Assets and Retirement Plan Tax Forms You May Need to File - Part 1.


This question was answered by Denise Appleby
(Contact Denise)

RELATED FAQS
  1. What are the best ways to pay less income tax?

    Learn about reducing your income tax burden by contributing to an employer-sponsored retirement plan or IRA, and see what ... Read Answer >>
Related Articles
  1. Taxes

    Saver's Tax Credit: A Retirement Savings Incentive

    Here's another reason to put money toward your retirement nest egg.
  2. Taxes

    Give Your Taxes Some Credit

    A few tax credits can greatly increase the amount of money you get back on your return.
  3. Retirement

    How to Save More for Your Retirement

    Be sure you know all the tax-advantaged ways in which you can save more for retirement.
  4. Personal Finance

    5 Tax Credits You Shouldn't Miss

    If you're not taking advantage of these deductions, you could be missing out on tax savings.
  5. Retirement

    IRA Contribution Limits in 2016

    Find out about the 2016 limits for contributions and income thresholds for individual retirement accounts, including traditional IRAs and Roth IRAs.
  6. Retirement

    How Tax-Deferred Savings Boost Retirement Income

    One of the best ways to accumulate funds for retirement is to use tax-deferred savings vehicles.
  7. Retirement

    8 Essential Tips For Retirement Saving

    These eight tips can help your retirement savings grow.
RELATED TERMS
  1. Tax Credit

    An amount of money that taxpayers are permitted to subtract dollar ...
  2. Section 1341 Credit

    A tax credit available for taxpayers who are repaid in a later ...
  3. Individual Retirement Account - IRA

    An investing tool used by individuals to earn and earmark funds ...
  4. Hope Credit

    A nonrefundable education tax credit that can be claimed for ...
  5. Roth IRA

    A Roth IRA is an individual retirement plan that bears many similarities ...
  6. IRS Publication 590: Individual Retirement Arrangements (IRAs)

    A document published by the Internal Revenue Service (IRS) that ...
Hot Definitions
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.
  2. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  3. Return On Equity - ROE

    The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability ...
  4. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  5. Whole Life Insurance Policy

    A life insurance contract with level premiums that has both an insurance and an investment component. The insurance component ...
  6. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
Trading Center