Tax deductions and credits...

[Bades]

So I'm seeing if I open a Traditional IRA I can deduct up to the full amount of $5,000 that I could put in. That is a deduction. It also looks like there is a Savings Credit (Form 8880) where I can get a credit for having an IRA too.

I sort of see this as double dipping, but if this is allowed I have no problem doing it

[jpg7n16]

You can certainly qualify for both, but usually income is a pretty large limiting factor.

Here's the IRS site about the credit: Get Credit for Your Retirement Savings Contributions

Do you qualify? If so, enjoy the free money!

From: Get Credit for Your Retirement Savings Contributions

Income Limits The Savers Credit, formally known as the Retirement Savings Contributions Credit, applies to individuals with a filing status and income of:

• Single, married filing separately, or qualifying widow(er), with income up to $27,750

• Head of Household with income up to $41,625

• Married Filing Jointly, with incomes up to $55,500

[Bades]

Originally Posted by jpg7n16

You can certainly qualify for both, but usually income is a pretty large limiting factor.

Here's the IRS site about the credit: Get Credit for Your Retirement Savings Contributions

Do you qualify? If so, enjoy the free money!

Are those numbers groos income (salary), or AGI?

[jpg7n16]

Originally Posted by Bades

Are those numbers gross income (salary), or AGI?

Those are AGI. Per the form, use line 38 on your 1040.

For the retirement credit: http://www.irs.gov/pub/irs-pdf/f8880.pdf
Form 1040: http://www.irs.gov/pub/irs-pdf/f1040.pdf

[GrimJack]

Thanks for the heads-up - I did not even consider the form 8880 when I was going over my taxes. Fortunately, I did not have my prior year AGI handy so I did not complete my return. Woohoo! I may get some money back this year.