Notice
to Employees Regarding Saver's Credit:
This notice explains how you may be able to pay less tax by contributing
to your Employer's plan or to an Individual Retirement Arrangement
("IRA").
Beginning
in 2002, if you make contributions to the Plan or to an IRA, you
may be eligible for a tax credit call the "saver's credit."
This credit could reduce the federal income tax you pay dollar-for-dollar.
The amount of the credit you can get is based on the contributions
you make and your credit rate. The credit rate can be as low as
10% or as high as 50%, depending on your adjusted gross income -
the lower your income, the higher the credit rate. The credit rate
also depends on your filing status. See the table as the end of
this notice to determine your credit rate.
The
maximum contribution taken into account for the credit for an individual
is $2,000. If you are married filing jointly, the maximum contribution
taken into account for the credit is $2,000 each for you and your
spouse.
The
credit is available to you if you:
- are
18 or older;
- are
not a full-time student,
- are
not claimed as dependent on someone else's return, and
have adjusted gross income (shown on your tax return for the year
of the credit) that does not exceed: $50,000 if you are married
filing jointly, $37,000 if you are a head of household with a
qualifying person, or $25,000 if you are single or married filing
separately.
The
annual contribution eligible for the credit may have to be reduced
by any taxabledistributions from a retirement plan or IRA that you
or your spouse receive during the year you claim the credit, during
the 2 preceding years, or during the period after the end of the
year for which you claim the credit and before the due date for
filing your return for that year. A distribution from a Roth IRA
that is not rolled over is taken into account for this reduction,
even if the distribution is not taxable. After these reductions,
the maximum annual contribution eligible for the credit per person
is $2,000.
The
amount of your saver's credit will not change the amount of your
refundable tax credits. A refundable tax credit, such as the earned
income credit or the refundable amount of your child tax credit,
is an amount that you would receive as a refund even if you did
not otherwise owe any taxes.
The
amount of your saver's credit in any year cannot exceed the amount
of tax that you would otherwise pay (not counting any refundable
credits or the adoption credit) in any year. If your tax liability
is reduced to zero because of other nonrefundable credits, such
as the Hope Scholarship Credit, then you will not be entitled to
the saver's credit.
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CREDIT
RATES
If your income tax filing status
is "married filing joint" and your adjusted gross
income is:
$0 - $30,000
$30,001 - $32,500
$32,501 - $50,000
Over $50,000
If your income tax filing status is "head of household"
and your adjusted gross income is:
$0 - $22,500
$22,501 - $24,375
$24,376 - $37,500
Over $37,500
If your income tax filing status
is "single," "married filing separate,"
or "qualifying widow(er)" and your adjusted gross
income is:
$0 - $15,000
$15,001 - $16,250
$16,251 - $25,000
Over $25,000
|
Your
saver's credit rate is:
50% of contribution
20% of contribution
10% of contribution
credit not available
Your saver's credit rate is:
50% of contribution
20% of contribution
10% of contribution
credit not available
Your saver's credit rate is:
50% of contribution
20% of contribution
10% of contribution
credit not available
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