Who's eligible for the credit?
You're eligible for the credit if you're:
- Age 18 or older;
- Not a full-time student; and
- Not claimed as a dependent on another person’s return.
See the instructions for Form 8880, Credit for Qualified Retirement Savings Contributions (PDF), for the definition of a full-time student.
Amount of the credit
The amount of the credit is 50%, 20% or 10% of your retirement plan or IRA or ABLE account contributions depending on your adjusted gross income (reported on your Form 1040 series return). The maximum contribution amount that may qualify for the credit is $2,000 ($4,000 if married filing jointly), making the maximum credit $1,000 ($2,000 if married filing jointly). Use the chart below to calculate your credit.
In addition, if you have taken distributions in the recent past, they will reduce the amount of your credit.
The one requirement that many people in this situation overlook is that to receive this credit you must have income tax liability against which to apply the credit (Form 1040 line 12b); this credit is a nonrefundable credit. If your income tax liability (line 12b) is already zero, you are not entitled to this credit. This credit cannot be used to reduce other taxes such as self-employment tax or early-distribution penalties.
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