Low and moderate income people who contribute to an IRA or qualified retirement plan may be able to get a tax credit up to $1,000 ($2000 if filing jointly). This may be used to reduce your federal income tax dollar for dollar. This plan is also known as the Retirement Savings Contributions Credit.
If you make eligible contributions to a qualified retirement plan, an eligible deferred
compensation plan, or an IRA, you can claim the credit if all of the following apply.
- you are age 18 or older
- you are not a full time student
- no one else, such as your parent(s), claims an exemption for you on their tax return
- your adjusted gross income is at or below
- $56,500 if your filing status is married filing jointly
- $42,375 if your filing status is head of household, or
- $28,250 if your filing status is single, married filing separately, or qualifying widow(er).
These numbers are adjusted annually. Check the IRS website for the latest numbers. This credit is nonrefundable, which means you do not get the credit if other credits reduce your annual tax to zero.