You may be eligibile for a tax credit if you contribute to the RIT Retirement Savings Plan!
During "tax season," most of us are thinking of ways to lower our income taxes. You probably already know that making before-tax retirement plan contributions can save you money on taxes by lowering your taxable income, but did you know that some people may be able to pay even less federal income tax by taking advantage of the "Saver's Credit?"
The "Saver's Credit" is a tax credit that could reduce the federal income tax you pay dollar-for-dollar. The amount of the credit is based on the contributions you make to the RIT Retirement Savings Plan (the "Plan") or an individual retirement arrangement ("IRA") and your adjusted gross income. If you qualify, your tax credit rate can be as low as 10% or as high as 50%, depending on your adjusted gross income -- the lower your income, the higher the credit rate. The credit rate also depends on your filing status. See the tables below to determine your potential credit rate.
The maximum contribution taken into account for the credit for an individual is $2,000. If you are married filing jointly, the maximum contribution taken into account for the credit is $2,000 each for you and your spouse. The Saver's Credit is a "nonrefundable credit," meaning the amount of your Saver's Credit in any year cannot exceed the amount of tax that you would otherwise pay.
Retirement Savings Eligible for the Tax Credit
The Saver's Credit can be taken for your contributions to a traditional or Roth IRA; your 401(k), SIMPLE IRA, SARSEP, 403(b), 501(c)(18) or governmental 457(b) plan; and your voluntary after-tax employee contributions to your qualified retirement and 403(b) plans.
Rollover contributions (money that you moved from another retirement plan or IRA) aren’t eligible for the Saver’s Credit. Also, your eligible contributions may be reduced by any recent distributions you received from a retirement plan or IRA.
If your income tax filing status is "married filing joint" and:
If your income tax filing status is "head of household" and:
If your income tax filing status is "single," "married filing separate," or "qualifying widow(er)" and:
To claim the tax credit, if you are eligible, complete and attach IRS Form 8880 ("Credit for Qualified Retirement Savings Contributions") to your federal income tax return (Form 1040 or 1040A). You can print this form and its instructions directly from the IRS website: http://www.irs.gov/pub/irs-pdf/f8880.pdf.
Since RIT cannot provide tax or legal advice, please consult with your tax preparer if you think you are eligible for the Saver's Credit. You may also direct your questions to the Internal Revenue Service at 1-800-829-1040 (1-800-829-4059 TTY).