Form 8880

[jhill66]

I'm stumped. I believe I am entitled to claim a savings credit on Form 8880. Turbotax says I do not qualify. There is no worksheet to review or analyze in Turbotax. On the IRS website, the retirement savings calculator indicates I am entitled to the credit. I think I meet the basic qualifications (over 18, not a student, not a dependent). I made a 2020 contribution to my Roth IRA. The amount of the contribution exceeds the distributions taken in the last 2 years (by my wife, we file a joint return). I have taxable income (line 18, 1040) which exceeds the amount of the credit I am estimating to be received. I have taken a look at many posts on this topic and the normal replies ( --no taxable income -- tax due is all Sch SE self employment tax-- distributions taken in prior years exceeds contribution amount) don't seem to apply to my situation.  Normally I can dig into the worksheets and figure out a data entry error but no worksheet when the software indicates you do not qualify. Anyone have any thoughts?

[dmertz]

The calculations are done on Form 8880 itself, but if the resulting credit is zero, TurboTax doesn't include Form 8880 in your tax file.  Because this credit is a nonrefundable credit, you don't get any benefit from the credit if your income tax liability is already zero without this credit.  This credit cannot be used to reduce self-employment taxes.  Because this credit is meant to benefit those with lower incomes, it's common that those otherwise eligible for the credit have no income tax liability against which to apply the credit.

[jhill66]

Thanks for the reply and comment. I was aware that you need to have a tax liability (other than self employment taxes) as that has been commented on in previous threads. I do have a tax liability (line 18 on the 1040) greater than the savings credit amount (as I manually calculate it). I wonder if it has to do with the order that credits are applied? Do refundable credits get applied first, before nonrefundable? I did not receive one of the stimulus payments, so I have a refundable recovery rebate credit which, if applied first, would eliminate my tax liability...and then maybe that is why there in no savings credit??

[dmertz]

Certain other nonrefundable credits are indeed applied first, those present on Schedule 3 lines 1 through 3 and Schedule R line 22.  If these other credits by themselves are sufficient to reduce your income tax liability to zero, you don't get any Retirement Savings Contributions Credit.

Refundable credits are applied after and are not affected by nonrefundable credits.

For example, someone over age 65 who has an AGI of more than $12,000 but less than $15,525 will get the tax Credit for the Elderly and Disabled on Schedule R first, reducing income tax liability to zero before the application of any Retirement Savings Contributions Credit for which they might otherwise be eligible.

[jhill66]

Thanks for the reply, but no nonrefundable credits from Schedule 3 lines 1-3 or Schedule R, line 22. This was part of the credit limit worksheet for form 8880 that I did manually.  Still stumped, wish I could override Turbotax and just complete the form manually....

[dmertz]

The only other reasons you might not qualify other than insufficient taxable income is if you do not meet the basic requirements or you have made distributions from retirement accounts not rolled over or converted to Roth that reduce the amount of new contributions that are considered when calculating the credit.  IF TurboTax permits you to enter the Retirement Savings Contributions Credit section make sure that you have indicated that you were not a full-time student and review any amounts you entered as distributions you received in 2018, 2019 or 2021.  (TurboTax automatically fills in the amount for 2020.)

[jhill66]

Thanks. Have been all over that, entering and re-entering multiple times, reading and re-reading instructions for Form 8880 and Publication 590-A. Can't figure it out.... am just going to file without Form 8880 via Turbotax and then amend manually  later in the spring. Thanks for responding to these posts...

[Peter48]

I have the same problem: I appear to be completely qualified for the Savers Credit but no form 8880 is generated and no credit applied.  I have a tax preparer that I use every year who claims to use the best professional tax preparation software available.  I use Turbotax to check his work and to simulate different tax scenarios, as well as  to consider  if it makes sense to file in the future with Turbotax.  His software automatically creates form 8880 and applies the Savers Credit.  The same data used in Turbotax does not.  Everything in the instructions of the 8880 makes me think I am qualified, as does my tax preparer.  I can't believe there isn't some kind of bug.  This doesn't give me confidence to switch to Turbotax.

[dmertz]

Nobody has shown that TurboTax is doing an incorrect calculation on Form 8880, so it's likely that the difference is due to some of the entries that go on this form, all of which derive from user entries.  Assuming that the paid preparer is doing everything correctly, this implies that you have not accurately duplicated all entries that went into the preparation of the tax return prepared by the paid preparer or the difference is in some other aspect of the tax return that is being determined differently and is resulting in a different AGI, different amount of taxable income or a different amount of certain other tax credits.  You need to compare all other aspects of the tax return before comparing Forms 8880.

The only items that go directly on Form 8880 that affect the determination of the credit are student status and the amounts of any recent distributions made by you or your spouse that reduce the amount of new contributions that go into the calculation of the credit.  If your paid preparer was unaware of these and did not make the corresponding entries, it's possible that the Form 8880 produced the the paid preparer is incorrect.

[Peter48]

Thank you for your response.  Of course I have tried to duplicate everything from my tax preparer in Turbo Tax and for the most part have been successful.  For some reason, there is a slight difference between the QBI calculation from my tax preparer and Turbo Tax that I can't yet reconcile (which is an issue for later), but that does not appear to be the issue regarding the Savers Credit.  The AGI is almost identical in both calculations and in both cases is less than the $65k needed to get the savers credit.   The credits and taxable income are also both virtually identical - and the tax due is much higher than the Savers Credit should be.   I had the maximum allowable IRA contributions (14k filing jointly) as well as additional 401k contributions and SIMPLE contributions - way over the amount needed to get the Savers Credit - which is clearly reflected in the return.   I have never had any retirement plan distributions other than custodian to custodian rollovers and roth conversions, which I understand from the IRS instructions do not offset against contributions to calculate the Savers Credit.  I am not a student - or aware of any other disqualifying factors.  It would be helpful to have the 8880 filled out by Turbo Tax even if it resulted in no credit so it could illustrate what could be causing the credit to be set to 0.  As far as I am concerned, I am totally qualified for this credit.  I wouldn't be surprised if I entered something that is causing me not to get the credit but I have no idea what it could be.  I have not been able to reach anyone at Turbo Tax to discuss the issue in person and would like advice on how to reach them.  I keep getting automatically referred to the web site, which hasn't helped me yet.

[Peter48]

I was finally able to get through to a Turbo Tax Advisor to resolve this issue with the 8880.  It turns out I did qualify for the Savers Credit and that all data was entered correctly except that I had missed answering some personal questions that were needed to kick off the calculation.  The problem is now resolved.  The Turbo Tax Advisor was also able to identify how the QBI was calculated.  I am now very impressed with the Turbo Tax system and support!

[pav1]

What were the questions that triggered the the calculation (I'm in the same boat I think).

[DawnC]

If you attempt to go through the interview, it may tell you why you do not qualify.  Search for saver's credit (use the apostrophe or it won't work) and use the Jump to saver's credit link to go to the interview.      @pav1

It is a non-refundable credit meaning that if you tax liability is already at $0 (see Line 22 of your Form 1040), you won't get the credit.  

You qualify for the credit if you’re:

• 18 or older
• Not a full-time student
• Not claimed as a dependent on someone else’s return

In 2020 your adjusted gross income (AGI) also can’t be more than:

• $65,000 if married filing jointly
• $48,750 if head of household (with qualifying person)
• $32,500 if single, married filing separately, or qualifying widow(er) with dependent child

The maximum credit is $1,000 ($2,000 for married taxpayers who are filing jointly), but is often less due to other deductions and credits and is limited by income. For more details on how to calculate your credit, see the IRS Saver's Credit page.