You Still Have Time to Take Advantage of Saver’s Credit for 2014 Filing

Dec 03, 2014 By Evan Nielsen In Taxation No Comment Tags : , , ,

Saver’s credit, officially known as retirement savings contributions credit, is a great way to save money and save on your taxes. Saver’s credit is an incentive to low and moderate-income taxpayers to make retirement contributions to an IRS, 401k, or any other IRS recognized retirement account.

 

The saver’s credit can help offset the first $2,000 saved, and the best part is it’s a credit, and not a deduction. A deduction just allows you to reduce the amount of income that the IRS considers taxable. A tax credit allows you a dollar for dollar reduction in the amount of taxes owed. For example, let’s say you made $30,000 in taxable income in 2013, and paid out $2,000 in taxes with your return – a tax deduction of $1,000, would have reduced your taxable income to $29,000, and the amount of taxes you owed would have been figured based on the $29,000 amount. If you received a $1,000 tax credit, your taxable income would have remained $30,000, and you would get to take the credit off of the $2,000 taxes owed, making your payment to the IRS only $1,000.

 

Who Can Claim Saver’s Credit?

 

Whether you qualify to take the saver’s credit depends on whether you fall within the following income guidelines:

  • Single individuals: income up to $30,000 in 2014 or $30,500 in 2015
  • Married couples filing jointly: incomes up to $60,000 in 2014 or $61,000 in 2015
  • Married individuals filing separately: incomes up to $30,000 in 2014 or $30,500 in 2015
  • Head of households: incomes up to $45,000 in 2014 or $45,750 in 2015

 

When Can You Claim the Saver’s Credit?

 

You still have time to take advantage of the saver’s credit when filing your 2014 tax return. Contributions to workplace programs, such as 401(k) or 403(b) plans, must be made by the close of 2014, but you have until April 15, 2015 to set up a new individual retirement account or add money to an existing IRA for 2014.

 

If you have questions as to whether you qualify for the saver’s credit, or need assistance preparing your 2014 tax return, Nielsen Law Group is ready to assist you. Call (480) 888-7111 or submit a web request here.