25.15 Eligibility for the Saver’s Credit

You may be able to claim the retirement savings contributions credit (saver’s credit) on your 2012 return if you made contributions (25.17) to a retirement plan for 2012. This includes a contribution made to a traditional IRA or Roth IRA for 2012 by April 15, 2013.

Eligibility for the credit is restricted, based on your adjusted gross income. Adjusted gross income is increased by any exclusion for foreign earned income or income from Puerto Rico or American Samoa, or the foreign housing exclusion or deduction. Depending on your adjusted gross income, you may be eligible for a credit percentage of 50%, 20%, or 10% (Table 25-2). The applicable percentage applies to the first $2,000 of your contributions (25.16). However, regardless of your income, you cannot claim the credit for 2012 if you were born after January 1, 1995, are claimed as a dependent on another taxpayer’s 2012 return, or you were a full-time student during five or more months in 2012.

Table 25-2 Credit Based on Adjusted Gross Income for 2012

For 2013, the income limits may be increased by an inflation adjustment; see the e-Supplement at jklasser.com for an update.

Other limitations apply. In computing the credit on Form 8880, you must reduce contributions by recent retirement plan withdrawals (25.16). In addition, the credit is not refundable; it is limited to your tax liability (25.16).

Any allowable credit is in addition to other tax breaks you receive for making the contribution, such as the exclusion for elective salary deferrals to a 401(k) plan, or a deduction for a traditional IRA contribution.