IRS Form 8880 | Credit for Qualified Retirement Savings Contributions

IRS Form 8880 is used when people with lower incomes contribute to their retirement accounts. Only certain contributions will apply for this tax credit. The amount of your credit will be a percentage of your contributions to your retirement account annually. These amounts will range from 10 to 50 percent and will be lower as your AGI increases.

For the 2013 tax year the maximum available credit, for a single taxpayer would be $1000 or $2000 for those filing jointly.

Anyone interested in using this tax credit must have an Adjusted Gross Income also known as an AGI, that will fall below limits of income for your tax filing status. Each year these limits may change to allow for inflation. For the 2013 tax year a head of household filer who has an Adjusted Gross Income exceeding $44,250, a single filer with an Adjusted Gross Income exceeding $29,500 or joint filers exceeding $59,000 would not be eligible to take this tax credit at this time. As well, you must be at least 18 years of age. You cannot have been claimed as a dependent by anyone else nor would you have been able to have attended school as a full time student. There are other limitations listed on Form 8880.

Retirement plans that qualify for this tax credit would include:

• 401(K)plans
• Roth IRA’s
• 403 (B) plans
• Traditional IRA’s
• 457 plans

Form 8880 instructions will guide you through the process. If you aren’t confident that you understand the instructions and/or calculation processes you may wish to consult with a tax preparation professional for assistance.

How to File

Step 1 – Calculation and Documentation – Calculate your AGI. Gather supporting documentation that reports the total amount of your annual contributions.

Step 2 – Read Instructions and Complete Form 8880 – Carefully read and follow the instructions included with this form. Following these instructions, complete your form.

Step 3 – Attach to Your Return – Once you have completed the form, attach Form 8880 and supporting documents to your tax return.