The retirement Savings contribution credit

Saving up for your retirement is something to consider starting at a young age. If you begin to set aside small amounts of money for savings, you could end up with a comfortable nest egg to help support yourself and your family when the time comes to retire. The IRS also offers a tax incentive for those who put a certain amount of money into their retirement savings accounts per year.
The Retirement Savings Contributions Credit, sometimes referred to as the Saver’s Credit, is a tax credit that can save you money by planning for your financial future. Individuals can take advantage of a tax credit worth up to $1,000 for making eligible contributions to a retirement plan, such as an IRA or a plan offered by an employer. The credit amount increases to $2,000 for married couples who file a joint tax return. Individuals who claim this credit must be over age 18. They can’t be a full-time student, and they can’t be claimed as a dependent on the tax return of someone else.
Eligible contributions to a savings plan include contributions to a traditional or Roth IRA, elective deferrals to a 401(k) and some other plans, contributions to a §501(c)(18) plan, and voluntary after-tax employee contributions to certain qualified plans. Keep in mind that rollover contributions to these plans are not eligible for the Credit. In addition, your contributions may be reduced by the distributions you get from a retirement plan.
Like most tax credits, there are some income limitations on how much a taxpayer earns and whether or not they are eligible for the credit. The IRS has updated these amounts for tax year 2013.
Those who claim the credit must have an adjusted gross income that does not exceed $59,000 for joint filers, $44,250 if your filing status is head of household, and $29,500 if your status is married filing separately, qualifying widow, or single. These income limits are higher than they were in 2012. To claim this credit, complete and submit Form 8880, Credit for Qualified Retirement Savings Contributions to the IRS.