Homework SourseJulio and Lynn are married and will file a joint return Juli
Julio and Lynn are married and will file a joint return. Julio earned 35000 and he contributed 2000 to his 401k plan at work, Lynn earned 5000 and she contributed 1000 to her 401k plan. they have three dependants and their AGI is 37000. their tax liability is 530 and they had a child and dependant care credit of 530. what is the amount is their retirement savings contribution credit?
a) 530
b) 0
c) 1000
d) 600
Solution
As per the table below, for 2017 they must have tax credit of 50% of contributions of $ 3000 i.e. $ 1500 but since they have dependant care credit of $ 530 and tax liability of $ 530 only, they will get zero credit for retirement savings contribution credit. Thus answwer is Option B
2017 Saver\'s Credit
more than $31,000
| As per the table below, for 2017 they must have tax credit of 50% of contributions of $ 3000 i.e. $ 1500 but since they have dependant care credit of $ 530 and tax liability of $ 530 only, they will get zero credit for retirement savings contribution credit. Thus answwer is Option B 2017 Saver\'s Credit | |||
|---|---|---|---|
| Credit Rate | Married Filing Jointly | Head of Household | All Other Filers* |
| 50% of your contribution | AGI not more than $37,000 | AGI not more than $27,750 | AGI not more than $18,500 |
| 20% of your contribution | $37,001 - $40,000 | $27,751 - $30,000 | $18,501 - $20,000 |
| 10% of your contribution | $40,001 - $62,000 | $30,001 - $46,500 | $20,001 - $31,000 |
| 0% of your contribution | more than $62,000 | more than $46,500 | more than $31,000 |
