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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 next).
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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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$56,500 for 2011 ($57,500 for 2012) if your filing status is married filing jointly,
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$42,375 for 2011 ($43,125 for 2012) if your filing status is head of household (with qualifying person), or
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$28,250 for 2011 ($28,750 for 2012) 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,
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Salary reduction contributions (elective deferrals, including amounts designated as after-tax Roth contributions) 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 governmental 457 plan),
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A SIMPLE IRA plan, or
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A salary reduction SEP, and
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Contributions to a section 501(c)(18) plan.
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The portion of any distribution which is not includible in income because it is a trustee-to-trustee transfer or a rollover distribution.
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Any distribution that is a return of a contribution to an IRA (including a Roth IRA) made during the year for which you claim the credit if:
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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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Loans from a qualified employer plan treated as a distribution.
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Distributions of excess contributions or deferrals (and income attributable to excess contributions and deferrals).
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Distributions of dividends paid on stock held by an employee stock ownership plan under section 404(k).
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Distributions from an eligible retirement plan that are converted or rolled over to a Roth IRA.
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Distributions from a military retirement plan.
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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 2009 and 2010, and plan to do so in 2011 and 2012. You received a taxable distribution from a qualified plan in 2009 and a taxable distribution from an eligible section 457(b) deferred compensation plan in 2010. Your spouse received taxable distributions from a Roth IRA in 2011 and tax-free distributions from a Roth IRA in 2012 before April 15. You made eligible contributions to an IRA in 2011 and you otherwise qualify for this credit. You must reduce the amount of your qualifying contributions in 2011 by the total of the distributions you and your spouse received in 2009, 2010, 2011, and 2012.
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