Finance Quick Answers
I don't make much money but want to try to save a little for retirement. Is there anything that can help me?
Beginning in tax year 2002, there is a non-refundable tax credit for people with low incomes. For example, a single person making $15,000 or a couple making $30,000 or less each year can qualify for a 50% tax credit on the first $2,000 they save toward retirement. If they contribute the $2,000 to an IRA, they could qualify for a $1,000 tax credit.
The tax credit phases out as income increases. Therefore, a single person earning $15,001 to $16,250 and a married couple earning $30,001 to $32,500 each year can be eligible for a 20% tax credit. A single person earning $25,000 and a married couple earning $50,000 or less each year could still qualify for a 10% credit.
Dr. Joyce Cavanagh, Former Assistant Professor and State Specialist, Consumer and Family Economics
Last update: Friday, July 25, 2008