Using the Saver’s Credit you may be able to take the credit of up to $1,000 (up to $2,000 if filing jointly) if you make eligible contributions to a qualified IRA, 401(k) and certain other retirement plans. Here is a table showing what your credit would be depending on your filing status and income.
Head of Household AGI
Joint File AGI
As you can see it would be pretty hard to end up in the 50% bracket. I haven’t gotten all my tax information yet but I believe I would end up in 20% bracket coming close to getting to the 50% bracket. I won’t qualify though because I was a full-time student for 5 months of the year.
Another thing to keep in mind is if you don’t owe any taxes than this credit won’t do you any good. You can’t get a refund of the credit itself. The best it can do is reduce your taxes to zero which should result in an increased refund.
I’m thinking I’ll probably credit for the credit for the 2009 tax year. I’ll be attending school less than full-time in the spring semester. With attending school and then studying for the bar there is a good chance my income will be low enough to qualify for the credit. Depending on where my income ends up I could use a traditional IRA to lower my AGI enough to qualify for a higher percentage credit.
If you don’t make a lot of money and you contribute to a qualified retirement account make sure to determine whether you qualify for this credit.