Tax Credits For Low-Income Plan Participants
By: Source: AARP.org Date Posted: 2006-08-08 14:57:19.176322-04:00
Tax Credits for Low-Income Participants. You may be eligible for a non-refundable tax credit on your 401(k) contributions. This credit is in addition to the other tax deductions you already will receive. This provision, however, is scheduled to expire in 2006.
The credit is equal to 50% of up to $2,000 of contributions. So if you put in $2,000, you may be able to knock off between $200 and $1,000 from your tax check to the IRS each year. Here are the eligibility criteria:
Joint Filers
- Adjusted gross income below $30,000 = 50% credit
- Adjusted gross income between $30,000 and $32,500 = 20% credit
- Adjusted gross income between $32,500 and $50,000 = 10% credit
Single Filers
- Adjusted gross income below $15,000 = 50% credit
- Adjusted gross income between $15,000 and $16,250 = 20% credit
- Adjusted gross income between $16,250 and $25,000 = 10% credit
This column is meant to provide general financial information; it is not meant to substitute for, or to supersede, professional or legal advice.
Note: The content areas in this material are believed to be current as of this printing, but, over time, legislative and regulatory changes, as well as new developments, may date this material.
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