Do you know what Saver’s Credit is? If you do, you will need to be aware of how to create Form 8880. Through this form, you can determine whether you are eligible to receive retirement savings credit.
Meanwhile, if this is your first time hearing about this particular form, this article will guide you through it. By the end, you’ll be able to create the form in no time.
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How to Write Form 8880
Before discussing the different steps needed in the form, let’s talk about what Form 8880 from the IRS is.
In a nutshell, this form reports your contributions to your retirement savings accounts. The IRS encourages low-income earners to contribute to this savings account by giving them a tax credit.
By getting a tax credit, the tax you owe can be directly reduced. On the other hand, if you are getting a deduction, your taxable income only gets decreased. If you need to claim the retirement savings credit that you paid for, you will need to customize Form 8880.
Here are the steps you need to write Form 8880:
1. Identify if you are eligible for the saver’s credit
The first thing you need to do is check if you are eligible for this tax credit. The retirement plans that are eligible for the saver’s credit include the following:
- Individual retirement accounts (IRAs)
- Employer-sponsored plans (example: 401(k)s)
- Achieving a Better Life (ABLE) accounts
If you are making a contribution to any of these accounts, you can start drafting the form. The credit also requires you to be at least 18 years old.
2. Submit Form 1040 together with Form 8880
You’ll also need to prepare Form 1040 to file your tax return. Once you have completed both forms, make sure that you submit them to the IRS together.
3. Print out Form 8880
The process of Form 8880 creation starts by printing out a copy of the form. You will then need to complete the form with the necessary information. Once this is taken care of, you can mail it to the IRS.
One good thing about filing your taxes electronically is that you can complete this process online. All you need to do is follow the prompts so you can customize it with the right information.
4. Know how the calculation works
If you are planning to complete the form manually, it’s important that you know how the calculation works. Even though this form only contains one page, it will require specific information.
You will need to include how much you’ve been contributing for the year. Make sure to check your traditional IRA, Roth IRA, and ABLE accounts. These should not include the rollover amounts.
After that, you have to prepare your adjusted gross income (AGI) so you can determine your credit percentage. The saver’s credit you are eligible for will be a percentage of the following:
- Traditional or Roth IRA contributions
- Voluntary after-tax employee contributions on a qualified retirement plan
- Elective salary deferral contribution
- ABLE account contribution
- 501(c)(18)(D) plan contributions
If you are single, the maximum credit you qualify for is $1,000. But if you are married, the maximum credit is $2,000.
Free Form 8880 Credit For Qualified Retirement Savings Contributions Template
One of the advantages of filing your return electronically is that you can start drafting Form 8880 online. You can even use a template to help you save time in computing for the credit.
Form 8880 needs to be submitted together with your annual regular tax return. If you require more time to complete your return, you may get in touch with the IRS and request an extension. They will usually grant you one as long as you accomplish Form 4868.
Form 8880 – Credit for Qualified Retirement Savings Contributions
How to Use Fill to Write Form 8880 Credit for Qualified Retirement Savings Contributions
There are plenty of reasons why you should use a template without knowing how to draft Form 8880. Not only will the template help you save time, but it will also be a much easier method for you.
Create an account at Fill today to start customizing your form. You won’t need to download anything since the form is readily available on Fill’s website.
When you’re done, you can send it right away for remote collaboration or online signing. It’s that easy to use. Start using Fill so you can see the advantages in no time.
