Saver's Credit

You may qualify for the Saver's Credit if you are 18 or older, not a full-time student, not claimed as a dependent on another return, and meet certain income requirements.

Your adjusted gross income (AGI) and filing status determine the amount of credit you can receive — 10%, 20% or 50% of your IRA or other eligible retirement plan contribution.

You can contribute to an IRA until April 15, 2009, and claim the Saver's Credit on your 2008 tax return.

The Retirement Savings Contribution Credit, known as the Saver's Credit, allows you to get a credit for up to half of what you contribute to your IRA or other qualified retirement plan. Up to $2,000 of your annual contribution is eligible for the credit. If you are Married Filing Jointly and you and your spouse make eligible contributions, both of you may claim the credit. Note: If you received a distribution from an IRA or other plan with contributions eligible for the credit, the distribution reduces the amount of your 2008 contributions that are eligible for the credit. For 2008, this applies to distributions you received during 2006, 2007 and 2008, and to distributions you will receive in 2009 before the due date of your 2008 return (including extensions).

Saver's Credit Requirements

You qualify for the Saver's Credit if you are:

18 or older
not a full-time student
not claimed as a dependent on someone else's return, and
have an AGI that does not exceed $53,000 if Married Filing Jointly, $39,750 if Head of Household and $26,500 if Single, Married Filing Separately or Qualifying Widow(er).

Your Maximum Saver's Credit Amount

The Saver's Credit is equal to a percentage of your eligible contributions. AGI and filing status determine the percentage — 10%, 20% or 50%. When calculating the Saver's Credit, AGI includes excluded foreign income. Here's how the income limitations break down according to filing status.

Married Filing Jointly
$0–$32,000, 50%
$32,001–$34,500, 20%
$34,501–$53,000, 10%

Head of Household
$0–$24,000, 50%
$24,001–$25,875, 20%
$25,876–$39,750, 10%

Single, Married Filing Separately or Qualifying Widow(er)
$0–$16,000, 50%
$16,001–$17,250, 20%
$17,251–$26,500, 10%

You have until April 15, 2009, to start or contribute to an IRA to claim the Saver's Credit on your 2008 tax return.