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If you made contributions to any one of a certain set of retirement accounts this year, you may qualify for an additional tax credit. Not everyone qualifies for the retirement savings contribution, also known as the saver’s credit. In order to qualify, you’ll need to have made contributions to an IRA, Roth IRA, or 401(k) or other similar elective contribution programs. You’ll also need to make less than certain limits on gross adjusted income, depending on filing status.

In order to qualify for the credit, your adjusted gross income will need to be less than:

  • $27,750 if you’re a single filer
  • $41, 625 if filing as household
  • $55,500 if married and filing jointly

To find your adjusted gross income, check line 38 of your Form 1040, line 22 of your form 1040A, or line 37 of your Form 1040NR.

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You also don’t qualify for the credit if you were a student during the tax year. You are considered a student during the year if you spent any part of 5 calendar months as a full-time student at a school, or took a full-time on-farm training program by any school or state, local, or county government agency. For the purpose of Form 8880, “school” includes technical, trade, and mechanical schools, but not on-the-job training courses, correspondence courses, or schools offering courses only online.

Finally, to qualify, the person making qualified contributions cannot be claimed as a dependent on someone else’s tax return, or born after January 1, 1993.

Here’s a list of everything you’ll need to figure your credit:

  • The amounts you and your spouse made in traditional IRA and Roth IRA contributions this year, not including rollover contributions
  • The amounts you and your spouse made in Elective deferrals to a 401(k) or other qualified employer plan, voluntary employee contributions, and 501(c)(18)(D) plan contributions for 2010
  • If you’ve made distributions from the account since 2007, you’ll need these amounts. The list of accounts that fall into this category is extensive, including loans treated as distributions and distributions from military retirement plans. For safety’s sake, gather any documents for any fund distributions since 2007, and consult the list included in the Form 8880 instructions.
  • A copy of your Form 1040, 1040A, or 1040NR. Your total amount of your credit is limited based on other credits, and you’ll need to record credits listed on certain lines of your tax return. If you’re filing a Form 1040, you’ll need the total from lines 47 through 49 of you Schedule R, line 22. Form 1040A filers will need the total of credits from lines 29 through 31. 1040NR filers will need the total from lines 45 and 46.

With all that information gathered, Form 8880 practically fills out itself. You’ll record the relevant amounts on the form, which will then lead you through a bit of arithmetic to figure out your credit. (Exactly how much credit you qualify varies based on income, contributions, and distributions.) The process isn’t nearly as tricky as it sounds. Once you have all the relevant information you need, filling out Form 8880 is an easy, self-explanatory step by step process.

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Author Bio

Total Articles: 1080
Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Article comments

1 comment
Jim says:

I am thinking the “student definition” on 8880 is a bad rewrite- I think they meant it to mean the same as the us code? Or perhaps they didn’t. What do you think?

26 U.S. Code § 152 – Dependent defined

(2) Student defined
The term “student” means an individual who during each of 5 calendar months during the calendar year in which the taxable year of the taxpayer begins—
(A) is a full-time student at an educational organization described in section 170 (b)(1)(A)(ii), or
(B) is pursuing a full-time course of institutional on-farm training under the supervision of an accredited agent of an educational organization described in section 170(b)(1)(A)(ii) or of a State or political subdivision of a State.

Irs Form 8880

You were a student if during any part of 5 calendar months of
2014 you:
• Were enrolled as a full-time student at a school, or
• Took a full-time, on-farm training course given by a school or a
state, county, or local government agency.
A school includes technical, trade, and mechanical schools. It
does not include on-the-job training courses, correspondence
schools, or schools offering courses only through the Internet.