Question

Will we be able to claim savers credit

Forum|Forum|3 years ago
December 24, 2022
1 reply
0 views

We file married joint. My wife will receive a w2 for about 60K (60K taxable income- says her final 2022 paystub)

I started my own business this year and will have losses after equipment purchases and a hefty truck deprecation, among other deductions.. in turn will reduce her AGI..

I read on the IRS website, married, joint, with a AGI of $41K or less can receive a 50% credit on any IRA contributions- up to $2,000 credit (with a $4K max contribution.. for the credit..).

It appears the IRA limit per person is $6K a a year. Our IRA is only in my name (my wife has a 401 but not including) - If I have already, or meet/exceed $4K in just my IRA, will that qualify for a $2K credit? and does it need to be done by dec 31st? Or like other retirement accounts, do I have a bit longer??

Almost seems too good to be true??

Hal_Al

Employee

The Credit is for Qualified Retirement Savings Contributions, not just having $4000 in your IRA. You have until April 18, 2023 to make qualified contribution for tax year 2022.

If you made a $4000 IRA contribution, earlier in 2022, that counts for the credit. Edited, per dmertz's reply: $2000 is the limit for each spouse. You would have to contribute $2000 to your IRA and $2000 to your spouse's 401k (or IRA) to get the maximum credit . See line 6 of form 8880.

The Retirement Savings Contributions Credit (“Saver’s credit”) is very limited and is for low income people. See the table on Form 8880: https://www.irs.gov/pub/irs-pdf/f8880.pdf

You, or your spouse, must not have taken money out of a retirement account in the last three years. See line 2 on form 8880.

It is not a refundable credit. You must have a tax liability to take the credit against.

M

Mike92ctAuthor

Thank you.

Happy holidays

We have never taken a withdrawal. And I should have made that more clear, my reference to contributions was FOR the tax year 2022. If I make sure I have 2022 contributions of $4k or more... then thats a contribution?? And I don't see anything about low-income but rather just a AGI of a certain amount, which by my deductions should bring us below the number mentioned.

And a non refundable credit.. I don't believe my business expenses/deductions, will bring us to Zero... just a refund on what my wife has already paid. So, a nonrefundable credit would still offset any remaining amount due??