Retirement Saver's Credit

[Diane]

The only client I have so far that qualified for this credit. Then, this year, there seems to be a hitch -

Reduction of eligible contributions. For 2010, eligible contributions are reduced by the total amount of distributions the taxpayer (and spouse if MFJ) received from January 1, 2008 through the due date of the 2010 return. These amounts include Regular IRA and Roth IRA, 401(k), SEP, Simple, and Qualified retirement plans.

My client is filing MFJ and the spouse received a retirement benefit from the State. From reading the above, my understanding is that her retirement benefit from the State disqualifies them from the Retirement Saver's Credit. Am I right?

Diane

[Pacun]

The only client I have so far that qualified for this credit. Then, this year, there seems to be a hitch -

Reduction of eligible contributions. For 2010, eligible contributions are reduced by the total amount of distributions the taxpayer (and spouse if MFJ) received from January 1, 2008 through the due date of the 2010 return. These amounts include Regular IRA and Roth IRA, 401(k), SEP, Simple, and Qualified retirement plans.

My client is filing MFJ and the spouse received a retirement benefit from the State. From reading the above, my understanding is that her retirement benefit from the State disqualifies them from the Retirement Saver's Credit. Am I right?

Diane

Yes, enter the amount received and she will qualified for reduced amount or nothing. This is not new.

[Diane]

Thanks, it never applied in the prior year. So, I wasn't prepared for the reduction.

Diane