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TAX TIP: LET THE GOVERNMENT MATCH YOUR 401(K) CONTRIBUTION

March 31, 2008

Poor Richard said "a penny saved is a penny earned." It might be a penny-and-a-half earned if you qualify for the "Saver's Credit" for retirement plan contributions.

The Savers Credit reduces your federal taxes by up to $1,000, or $2,000 for joint filers, for individual contributions to IRAs, 401(k)s, and other qualified retirement plans.

The credit is up to 50% of contributions for single filers with adjusted gross income up to $15,500 and joint filers with AGI up to $31,000. It is available at 10% of IRA or 401(k) contributions for single filers with AGI up to $26,000 and joint filers with AGI up to $52,000.

This is an easy credit to miss. Don't overlook it. You claim it using Form 8880.

This is another installment in our daily series of 2008 filing season tips. Watch for them each and every day here through April 15!

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