Tax Credit for Contributing to Retirement

2019 news 1Ministers with lower income may be able to claim a substantial credit on income taxes for contributing to the Nazarene 403(b) Retirement Savings Plan.

The Saver’s Credit enables a couple filing a joint return to earn up to $1,000 each for contributing to a qualifying workplace savings program, such as the Nazarene 403(b) Retirement Savings Plan, if income falls within certain ranges. The credit is in addition to the tax incentives already available through the plan. The maximum annual contribution amount on which the credit can be claimed is $2,000.

Among the eligibility requirements for the 2019 tax year, adjusted gross income (AGI) cannot be more than $64,000 for a married couple filing a joint return; $48,000 for an individual filing as head of household; or $32,000 for a single filer, married filing separately, or a qualifying widow(er).

Keep in mind that unlike a deduction, this tax credit reduces federal income taxes dollar for dollar.

Only voluntary contributions to a retirement account are eligible, so Annual Pension Supplements (APS) may not be included.

There are additional eligibility requirements that must be met. Details may be found on Form 8880, which is used to claim the credit.

Note: Resources provided by Pensions and Benefits USA and its partners are for general informational purposes only and are not intended to substitute for advice from professional tax or financial planners, or lawyers. For information related to your specific situation, consult your own trusted specialists.