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Consumer
Claim saver's tax credit for 2012
WASHINGTON (1/2/13)--If you're a low- or moderate-income worker saving for retirement in a 401(k), an individual retirement account (IRA) , or similar workplace retirement program, you could be eligible to claim a special tax credit of as much as $1,000 for individuals and $2,000 for married couples  (U.S. News & World Report Dec. 20).

You can claim this credit in addition to any other tax savings you get for your retirement account contributions.

Here are the rules to claim this credit on your 2012 tax return:

  • You must be age 18 or older.
  • Your adjusted gross income must be within the Internal Revenue Service (IRS) guidelines: up to $28,750 for singles, $43,125 for heads of households, and $57,500 for couples.
  • You can't count rollovers to your retirement account towards the credit.
  • You're eligibility might be reduced if you recently took a distribution from your retirement account.
Note that you can't take the 2012 credit if you were enrolled as a full-time student during the calendar year or if someone else will claim you a dependent.

The saver's credit is highest for retirement savers with the lowest incomes. The credit ranges between 10% and 50% of retirement contributions, with the highest percentage going to savers with the lowest incomes.

If you were unaware of this credit, first introduced as a temporary provision in 2002 and made permanent in 2006, you're not alone: Only one of four workers has heard about it.

You have until April 15 to make qualifying contributions to a new or existing IRA and get the saver's credit on your 2012 tax return. Follow the instructions on IRS form 8880 to figure the saver's credit correctly and claim it.
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