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Retirement Savings Contributions Credit (Saver’s Credit)

Low and moderate-income workers still have time to make qualifying retirement contributions and get the saver's credit on their 2013 tax return.

Also known as the retirement savings contributions credit, the saver's credit is available in addition to any other tax savings that apply and helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs.

The saver's credit supplements other tax benefits available to people who set money aside for retirement. Taxpayers have until April 15, 2014, to set up a new individual retirement arrangement or add money to an existing IRA for 2013.

Most workers may deduct their contributions to a traditional IRA. Though Roth IRA contributions are not deductible, qualifying withdrawals, usually after retirement, are tax-free. Normally, contributions to 401(k) and similar workplace plans are not taxed until withdrawn.

Note: Elective deferrals (contributions) must have been made by the end of the year to a 401(k) plan or similar workplace program, such as a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, and the Thrift Savings Plan for federal employees.

The saver's credit can be claimed by:

Married couples filing jointly with incomes up to $60,000 in 2014;

Heads of Household with incomes up to $45,000 in 2014; and

Married individuals filing separately and singles with incomes up to $30,000 in 2014.

The saver's credit can increase a taxpayer's refund or reduce the tax owed. The maximum saver's credit is $1,000 for single filers and $2,000 for married couples and is based on filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs.

Other special rules that apply to the saver's credit include the following:

Eligible taxpayers must be at least 18 years of age.

Anyone claimed as a dependent on someone else's return cannot take the credit.

A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student.

In tax-year 2011, the most recent year for which complete figures are available, saver's credits totaling just over $1.1 billion were claimed on nearly 6.4 million individual income tax returns. Saver's credits claimed on these returns averaged $215 for joint filers, $166 for heads of household and $128 for single filers.

Please call us if you have any questions about the saver's credit. We're here to assist you.

Missed the Deadline?

 If you are one of the taxpayers who missed the April 15th deadline to file your taxes, you should still fie as soon as possible.  Filing and paying the taxes you owe as soon as possible keeps the cost of penalties and interest from getting away from you. Of course if you are due a refund there is no filing penalty for leaving your money where you cannot use it.

E-file programs will be available through October 15th and is the easiest, safest and most accurate method for filing.  The IRS will confirm receipt of your return and if you are due a refund you should receive it within 21 days of the IRS accepting your return.

If you owe, you should pay as much as you can when you file your return and pay the remaining balance as quickly as you can the minimize penalties and interest. If you missed the April 15th deadline the IRS may charge a penalty for filing late and for late payment.  The IRS has been known to reduce late filing penalties if you can show a reasonable cause for missing the deadline, interest charges are not normally waived or reduced.  If you need additional time, you can request a payment agreement by applying on line using the IRS Online Payment Agreement Application tool or file Form 9465, Installment Agreement Request.

If you are comfortable preparing your return you can use the IRS Free File available through IRS.gov or if not you can contact Matrix Tax and Financial Services for assistance at 866-921-0121.

  • Choose Direct Deposit for Your Tax Refund

    Direct Deposit is the fastest, safest way to receive your tax refund. And it is free. When you combine e-file and direct deposit, you could receive your refund in as few as 10 days.

    Last year more than 79 million taxpayers chose direct deposit.

    Direct Deposit provides greater security for your refund. Each year thousands of printed checks are returned to the IRS as undeliverable. With Direct Deposit there is no check to lose, have stolen or returned to the IRS.

    With Direct Deposit the money goes directly into your bank account. You won’t have to make a special trip to the bank to deposit the money yourself. You can also deposit your refund into multiple accounts. Use the split refund option to divide your refund into as many as three checking or savings accounts in as many U.S. financial institutions.

    Tell your tax preparer you want Direct Deposit or if you prepare your own return follow the instructions for the form or in the tax software being used. Be sure you enter the correct bank account and bank routing numbers. Be aware that some financial institutions do not allow a joint refund to be deposited into an individual account; check with yours before you file.  You should never use Direct Deposit to designate part of your refund to pay your tax preparer.

    Most states also offer Direct Deposit for tax refunds.

    For more information see IRS Publication 17, Your Federal Income Tax in the Forms and Publications section of the IRS.gov, or call us at 864-579-1640.