Uncle Sam WantsYou To SaveFor Retirement * available throughthe Free File program (NAPS)—If you ever feel your fi- at www.irs.gov/FreeFile, nancesare toostretched to save for retirement, you're not alone—and there + If you are using tax preparation soft- could be good newsfor you. The Saver’s ware, use Form 1040, Form 1040A or Form 1040NR.If yoursoftware has an Credit—alittle-known tax credit made available by the IRS to eligible taxpayers—could make savingfor retirement interview process, be sure to answer questions about the Saver’s Credit, also referred to as the Retirement more affordable than you think. It may reduce yourfederal income taxes when Savings Contributions Credit and/or Credit for Qualified Retirement Sav- you savefor retirement through a qual- ified retirement plan or an Individual Retirement Account (IRA). “The Saver's Credit is a fantastic tax credit because it pays you to save for retirement. It offers eligible workers an addedincentive to save for retirement ontopofthe benefits of tax-deferred savings whenthey contribute to a 401(k), 403(b), 457(b) or IRA?says Catherine Collinson, president of nonprofit Transamerica Center for RetirementStudies*, Here's howit works: 1. Check YourEligibility Depending on your filing status and incomelevel, you may qualify for a nonrefundable credit of up to $1,000 (or $2,000if filing jointly) on your fed- eral incometaxesfor that year when you contribute to a 401(k), 403(b), 457(b) or similar retirementplan, or IRA. Single filers with a maximum Ad- justed Gross Income (AGI) of up to $31,000 in 2017 or $31,500 in 2018 are eligible. For the head of a household, the AGI maximum is $46,500 in 2017 or $47,250 in 2018. For those who are married and file a joint return, the AGI maximum is $62,000 in 2017 or $63,000 in 2018. tax credit madeavailable by theIRS to eligible taxpayers—could make savingfor retirement more affordable than many people realize. er person's tax return.If you fit within these parameters, the Saver’s Credit may beforyou. 2. Save for Retirement Save for retirement in your em- ployer’s retirement plan,if offered, or in an IRA.In general, for every dollar you contribute to a qualified retirement plan or IRA (upto the lesser of the limits permitted by an employer-spon- sored plan or the IRS), you defer that amount from your current overall taxable income onyourfederal tax re- turns—andyou mayalso qualify for the Saver’s Credit. 3. File Your Tax Return and Claim the Credit manually, complete Form 8880, the Credit for Qualified Retirement Sav- ings Contributions, to determine your exact credit rate and amount. Then transfer the amountto the designated line on Form 1040, Form 1040A or Form 1040NR. + If you are using a professional tax preparer, be sure to ask about the Saver’s Credit. *Consider having any refund you receive directly deposited to an IRA to further boost yourretirementsavings. Note that the Saver’s Credit is not available with Form 1040EZ. The 18th Annual Transamerica Re- tirementSurvey foundthat just 36 percent of American workers are aware that the credit exists. Don't overlook Uncle Sam’sSaver’s Credit; it may help you pay tax returns, you can claim your Saver’s Credit by subtracting this tax credit Jess in your currentfederal incometaxes while savingforretirement. For more details and resourceson the Saver's Credit and an online retirement Workerswhoare eligible to claim the Saver’s Credit are also eligible to take transamericacenter.org. When you prepare your federal from yourfederal incometaxes owed. ‘You must be18years orolder by Jan- advantageof IRS’ Free File program for taxpayers with an AGIof$66,000orless. orbeclaimed as a dependenton anoth- make their tax preparation software uary 1 and cannotbea full-time student ings Contributions. + If you are preparing yourtax returns ‘Twelve commercial software companies planning calculator, visit Transamerica Center for Retirement Studies’ at www. Transamerica Center for Retire- mentStudies* (TCRS)is a division of Transamerica Institute*, a nonprofit, private foundation.
