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If you or your employer make eligible contributions (defined later) to a retirement plan, you may be able to take a credit of up to $1,000 (up to $2,000 if filing jointly). This credit could reduce the federal income tax you pay dollar for dollar.
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You are not under age 18.
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You are not a full-time student (explained later).
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No one else, such as your parent(s), claims an exemption for you on their tax return.
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Your adjusted gross income (defined later) is not more than:
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$52,000 if your filing status is married filing jointly,
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$39,000 if your filing status is head of household (with qualifying person), or
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$26,000 if your filing status is single, married filing separately, or qualifying widow(er) with dependent child.
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A full-time student at a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or
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A student taking a full-time, on-farm training course given by either a school that has a regular teaching staff, course of study, and regularly enrolled body of students in attendance, or a state, county, or local government.
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Foreign earned income,
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Foreign housing costs,
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Income for bona fide residents of American Samoa, and
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Income from Puerto Rico.
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Contributions to a traditional or Roth IRA, and
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Salary reduction contributions (elective deferrals) to:
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A 401(k) plan (including a SIMPLE 401(k)),
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A section 403(b) annuity,
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An eligible deferred compensation plan of a state or local government (a 457 plan),
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A SIMPLE IRA plan, or
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A salary reduction SEP.
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The distribution is made before the due date (including extensions) of your tax return for that year,
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You do not take a deduction for the contribution, and
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The distribution includes any income attributable to the contribution.
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The year in which you claim the credit,
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The 2 years before the year in which you claim the credit, and
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The period after the end of the year in which you claim the credit and before the due date of the return (including extensions) for filing your return for the year in which you claimed the credit.
Example.
You and your spouse filed joint returns in 2005 and 2006, and plan to do so in 2007 and 2008. You received a taxable distribution from a qualified plan in 2005 and a taxable distribution from an eligible section 457(b) deferred compensation plan in 2006. Your spouse received taxable distributions from a Roth IRA in 2007 and tax-free distributions from a Roth IRA in 2008 before April 15. You made eligible contributions to an IRA in 2007 and you otherwise qualify for this credit. You must reduce the amount of your qualifying contributions in 2007 by the total of the distributions you received in 2005, 2006, 2007, and 2008.
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