These days pretty much everyone knows it's never too early to start planning for retirement. The staff at Williams Tax & Bookkeeping in Benton, AR know that taxpayers want to get ahead of their retirement needs no matter what their age. That's why we work with clients every day to help them find the best ways to plan for their retirement and understand how that affects their taxes. You can always call our Benton, AR office to speak with one of our trained professionals and we've also brought together the information you need to know about how handle the retirement contributions that are most likely to affect your tax return.
Retirement Savings and Your Taxes
The IRS understands that credits are an important incentive when it comes to making saving and planning for the future easy. Their Retirement Savings Credit aims to make saving easier as well as making it more attractive for people just starting out in their careers. These credits can be claimed by anyone who meets very simple criteria. As of 2015, the basic criteria to qualify for these credits are:
- Taxpayer must be over 18
- Not a full-time student (Part time and casual students can still qualify)
- Person is not claimed as a dependent on anyone else's tax return for that year
This basic set of criteria makes it easy for many adults to qualify for the credit. There4 are additional rules regarding how a “full time” student is defined. It’s important to understand these associated rules as well so that you know whether or not you qualify. This is especially important for casual, part-time and even online students as they may think they are full-time but, according to the IRS definition, they may still qualify.
The credit itself is applied based on how much you contribute through your employer's retirement plan or through your own retirement savings account. The amount you can claim as part of this credit depends on a number of factors and you can qualify for up to 50% of that contribution.
Credits and Adjustments
Many taxpayers already know they can use their retirement savings contributions to adjust their income for the year, but they don't always know they can also earn a credit based on those contributions. A person who contributes even $1,000 to their IRA account can easily qualify for an addition $500 in savings credit through the program offered through the IRS, depending on their specific circumstances.
Credits differ from adjustments and so they don't cancel each other out. In fact, they can help to make a he difference in a person's tax bill or even as a way to boost their refund. There are specific limits and rules regarding how much of a person's contributions can be converted into credits, so it's important to work with a qualified tax preparer. In order to find a tax preparer, most people reach out to local companies so they can speak one on one with a professional in their area. Navigating through the rules, limits and regulations can be a bit of a headache which is why so many people take the time to find a tax professional for retirement savings contribution credit information.
How Much of a Credit Can You Get
Determining how much of a credit you qualify for is based on a number of different factors. The best way to ensure you're getting the maximum credit you qualify for is to find a tax professional for retirement savings contribution credit questions. This type of professional tax preparer can review your retirement plans and savings accounts. You may qualify for different credits and incentives based on what your employer has put in place as well as any savings you maintain on your own.
A qualified accountant and tax preparer will go through all of your accounts – both current and past – in order to see what you may qualify for. Then, he or she can help you prepare a tax return for the current year based on this information. He or she can potentially also file an amended return if there were credits you qualified the previous year which you didn't know about.
Filing an amended return may seem like a lot of hassle but if you find a tax preparer who understands these credits it is well worth the effort. In some cases, finding a tax professional for retirement savings contribution credit is as easy as reaching out to your current accountant or tax preparer. In many cases, these are the same professionals who understand niche aspects of tax law. If not, however, these same accountants and tax professionals will be able to put you in touch with the right office or team.
Once you're ready to make the most out of the retirement savings contributions you're making each year, call Williams Tax & Bookkeeping at our convenient Benton, AR location. Our team of professional tax preparers will review your contributions, tax statements and other financial documents in order to get a clear idea of your financial and tax situation. Then we can work with you to prepare your return for the current year and ensure you're getting all the credits you qualify for. After all, we understand that making the most of the present is the best way to plan for a brighter future.
