IRS Issues Reminder To Employers Of The Savers Tax Credit

On December 13 the IRS issued an Information Release reminding employers and individuals of the availability of the “Saver’s Credit” for 2012. Those individuals who have remaining salary and bonuses for 2012 who have not made elective deferrals to their 401(k) or 403(b) plans may have an opportunity to do so with help from the federal government.

The eligibility is dependent upon the taxpayer’s adjusted gross income. For married couples filing jointly, the cap for 2012 is $57,000; married filing separately and singles can earn up to $28,750 in 2012 and be eligible for the credit. These amounts increase to $29,500 for singles and $59,000 for joint filers for 2013. According to the IRS Information Release the credit is not available to taxpayers under age 18, anyone who can be claimed as a dependent or a student.

It is a refundable credit so it can increase the refund or be used to offset other tax liability. The amount of the credit depends on the employee’s income and ranges from 10% to 50% of the first $2,000 deferred to a plan or IRA. The maximum credit is $1,000 per person/$2,000 for married couples.

The credit is also available for contributions to IRAs so those individuals who do not have access to an employer savings plan can set up an IRA on or before April 15, 2013.  Individuals claim the Savers Tax Credit by filing IRS Form 8880 with their tax return for the year.  .

Employers should consider reminding lower income workers of this benefit, particularly those who have made elective deferrals during the year.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Stinson Leonard Street - Employee Benefits & Compensation | Attorney Advertising

Written by:


Stinson Leonard Street - Employee Benefits & Compensation on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.