Retirement Savers Credit – Save for Later and Get the Benefits Now

For lower income South Tampa residents who contribute to your own retirement accounts the IRS provides a benefit you may not already be aware of, the Retirement Savers Credit. A credit differs from a deduction in that it gets counted after you determine how much tax you owe as opposed to a deduction which reduces your total income.

The Retirement Savers Credit reduces your tax bill dollar for dollar. For example, assume you owe the IRS $400 and you are eligible to receive a credit of $200. Your tax bill gets cut in half and you only have to pay $200.

How Does It Work?

Our typical South Tampa accounting and bookkeeping clients make regular annual contributions to their own retirement accounts to reduce their taxable income. The deadline to make this contribution is April 15th 2013.  The IRS rules say that if those contributions are to a qualified account and if you meet the eligibility requirements you may take a credit of between 10% and 50% of your retirement contribution.

Who Is Eligible?

Lower income tax payers in South Tampa and Clearwater are eligible for the Retirement Savers Credit.  This credit does not take into affect if you were employed or not but you cannot be a full time student during the year.  You also cannot qualify if you are a dependent on another person's return.  The lower your income the higher your credit percentage and you will not be able to take the credit if your income exceeds a certain level.

What Are The Limits?

Filing Status

2012 Maximum Income

2013 Maximum Income

Married Filing Jointly

$57,500

$59,000

Head of Household

$43,125

$44,250

Single and Others

$28,750

$29,500

 

The maximum credit is $2,000 for joint returns and $1,000 for others. The IRS requires that you were born before January 2, 1993.  Contact us to see if you qualify or if you have any questions.