My income is less than $18,000 a year and I contributed $5,500 to my Roth IRA but my retirement savings contribution credit is only $488. Why isn't it 50% of $2000?

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My income is less than $18,000 a year and I contributed $5,500 to my Roth IRA but my retirement savings contribution credit is only $488. Why isn't it 50% of $2000?

The retirement savings contribution credit is a non refundable credit. It can only be used to reduce your tax to zero.

Since your calculated tax was only $488, you only got $488 of the potential $1000.

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My income is less than $18,000 a year and I contributed $5,500 to my Roth IRA but my retirement savings contribution credit is only $488. Why isn't it 50% of $2000?

The retirement savings contribution credit is a non refundable credit. It can only be used to reduce your tax to zero.

Since your calculated tax was only $488, you only got $488 of the potential $1000.

My income is less than $18,000 a year and I contributed $5,500 to my Roth IRA but my retirement savings contribution credit is only $488. Why isn't it 50% of $2000?

Hal_Al is referring to *income* taxes. This tax credit cannot be used to reduce other taxes such as self-employment taxes or retirement early-distribution penalties.

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