If you make eligible contributions to an employer-sponsored retirement plan or

to an individual retirement arrangement (IRA), you may be eligible for a tax

credit. 

Here are six things you need to know about the Retirement Savings

Contributions Credit according to the Internal Revenue Service (IRS):

1. Income Limits.  The Savers Credit, formally known as

the Retirement Savings Contributions Credit, applies to individuals with a

filing status and income of:

- Single, married filing separately, or qualifying widow(er), with 

income up to $27,750
- Head of Household, with income up to $41,625

- Married Filing Jointly, with income up to $55,500

2. Eligibility requirements. To be eligible for the credit

you must have been born before January 2, 1992, you cannot have been a full-time

student during the calendar year and cannot be claimed as a dependent on another

person's return.

3. Credit amount. If you make eligible contributions to a

qualified IRA, 401(k) and certain other retirement plans, you may be able to

take a credit of up to $1,000 or up to $2,000 if filing jointly. The credit is a

percentage of the qualifying contribution amount, with the highest rate for

taxpayers with the least income.

4. Distributions.  When figuring this credit, you

generally must subtract the amount of distributions you have received from your

retirement plans from the contributions you have made. This rule applies to

distributions received in the two years before the year the credit is claimed,

the year the credit is claimed, and the period after the end of the credit year

but before the due date - including extensions - for filing the return for the

credit year.

5. Other tax benefits.  The Retirement Savings

Contributions Credit is in addition to other tax benefits which may result from

the retirement contributions. For example, most workers at these income levels

may deduct all or part of their contributions to a traditional IRA.

Contributions to a regular 401(k) plan are not subject to income tax until

withdrawn from the plan.

6. Forms to use. Too claim the credit use Form 8880,

Credit for Qualified Retirement Savings Contributions. For more information,

review IRS Publication 590, Individual Retirement Arrangements (IRAs),

Publication 4703, Retirement Savings Contributions Credit, and Form 8880.

Publications and forms can be downloaded at href="http://www.IRS.gov">http://www.IRS.gov or ordered by calling

800-TAX-FORM (800-829-3676).