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Saving for Your
Retirement
Some taxpayers eligible for a tax credit
If your adjusted gross income is less than $50,000, you may be eligible
for a nonrefundable credit against your income tax for elective
contributions you make to §401(k) plans, §403(b) annuities, §457 plans,
SIMPLE or simplified employee pension (SEP) plans, traditional or Roth
IRAs, and voluntary after-tax employee contributions to a qualified
retirement plan or a 403(b) annuity.
The amount of your credit can be as much as 50%, 20%, or 10% of your
contribution depending upon your filing status and modified adjusted gross
income, giving you a maximum annual credit of $1,000 ($2,000 if married
filing jointly).
This credit was due to expire at the end of 2006; however, recently
enacted legislation made this credit permanent. After 2006, the adjusted
gross income limits will be indexed for inflation, making more taxpayers
eligible for the credit.
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