Savers Credit

Good News! The Savers Credit has not only been extended it has been made permanent. The credit was scheduled to expire at the end of 2006. However, the Pension Protection Act of 2006 made this credit permanent and it will be indexed for inflation beginning in 2007.

This Credit is a non-refundable credit for lower income tax payers that make contributions to an IRA or a qualifying retirement plan. The credit is capped at $2,000. An eligible individual must be at least 18 years of age and not be claimed as a dependent on anothers tax return. In addition a taxpayers income must be under $50,000 if filing Joint, $37,500 if filing Head of Household, or $25,000 if filing single or married filing separate. Unlike many credits filing seperatly does not negate the credit.

Claiming the credit is done through the use of form 8880. This form is filed with the taxpayers return and is used to offset actual tax. In addition to the other requirements a qualifying taxpayer is not to be a student.

The information contained on this site should in no way be considered to be professional advice in the form of either tax, accounting, or legal service or consultation. You should always consult with a professional familiar with your individual circumstances before making any specific decisions related to accounting, tax, or legal matters.