With Saver's Credit, Some Taxpayers Can Get Two Tax Breaks in One
VIRGINIA BEACH, VA -- (Marketwired) -- 03/31/15 --
Liberty Tax, Inc. (NASDAQ: TAX)
The deadline is fast approaching for taxpayers to take advantage of one of the last tax breaks for 2014 -- the Individual Retirement Account (IRA) contribution. For some taxpayers, the contribution could mean two tax breaks -- the traditional IRA deduction and the Saver's Credit of up to $2,000. Liberty Tax Service advises taxpayers to review their retirement situation and consider opening an IRA or contributing to an existing IRA. Contributions made by April 15 may be fully or partially deductible for the 2014 tax year.
"The tax deduction for a traditional IRA is a great incentive for taxpayers to save for retirement," said John Hewitt, founder and CEO of Liberty Tax Service. "Even if a taxpayer chooses not to contribute, he or she should at least be advised of the potential tax savings."
Taxpayers who contribute to an IRA or an employer-sponsored retirement plan in 2014 may be able to take advantage of the Saver's Credit along with the traditional IRA deduction. This nonrefundable credit can be up to $2,000 per taxpayer, depending on adjusted gross income (AGI). This credit reduces the taxable amount dollar per dollar, but not less than zero.
Taxpayers covered by a pension plan can deduct IRA contributions if they meet the modified adjusted gross income (MAGI) requirements. In 2014, a couple, married filing jointly, whose MAGI is more than $96,000 but less than $116,000 can take a partial deduction for a traditional IRA, and so can single taxpayers (including head of household filers) whose MAGI is more than $60,000 but less than $70,000.
For taxpayers who are contributing to a Roth IRA, a couple, married filing jointly, can contribute when their MAGI is below $181,000, and a single taxpayer can contribute when their MAGI is below $114,000 and make the maximum contribution to a Roth IRA. The contribution limit for 2014 is $5,500 ($6,500 if age 50 or older) for both traditional or Roth IRAs. Taxpayers converting traditional IRAs to Roth IRAs are not subject to MAGI and filing status requirements.
Once again, taxpayers can take an allowance for tax-free distributions from individual retirement plans for charitable purposes on their 2014 returns.
About Liberty Tax, Inc.
Founded in 1997 by CEO John T. Hewitt, Liberty Tax, Inc. (NASDAQ: TAX) is the parent company of Liberty Tax Service. Liberty Tax is one of the fastest-growing tax preparation franchises and has prepared almost 18 million individual income tax returns in more than 4,300 offices and online. Liberty Tax's online services are available through eSmart Tax, Liberty Online and DIY Tax, and are all backed by the tax professionals at Liberty Tax locations and its nationwide network of approximately 35,000 seasonal tax preparers. Liberty Tax also supports local communities with fundraising endeavors and contributes as a national sponsor for many charitable causes. For a more in-depth look, visit Liberty Tax Service and interact with Liberty Tax on Twitter and Facebook.
Source: Liberty Tax, Inc.