• This credit is available to taxpayers who made elective contributions to IRAs, Roth IRAs, other qualified retirement accounts, and to ABLE account beneficiaries who contribute to their account.
    • Contributions on a Form W-2: in Box 12, codes D, E, F, G, H, S, AA, and/or BB; or, in Box 14, an amount coded, in TaxSlayer, as “Retirement (Not in Box 12) – Carry to Form 8880”
    • IRA contributions (for both traditional and Roth IRAs) made directly by the taxpayer, rather than through an employer (see page 2 of the Intake Booklet).
      • Traditional IRA contributions will have been entered in the IRA Deduction page, as described in section Schedule 1, Line 20 - IRA Deduction, page 73.
      • Roth IRA contributions are entered on the Retirement Savings Contributions Credits page, as described below.
  • Taxpayers who made contributions as described above may still be disqualified from using the credit by the following factors:
    • The taxpayer was not 18 years old as of the January 2 following the tax year.
    • The taxpayer was claimed as a dependent on someone else’s return.
    • The taxpayer was a full-time student during the year. 
  • If, based on the above, the taxpayer is eligible, determine if the taxpayer’s income is too high. Review the following after the taxpayer’s AGI has been determined.
    • For 2024, the credit is not available to those whose incomes (AGI) were above the following:
      • Single, Qualifying Surviving Spouse, and MFS: $38,200
      • Head of Household:  $57,375
      • Married Filing Jointly: $76,500
    • TaxSlayer correctly prevents award of this credit if an income limit is exceeded; no further action by the preparer is needed. No Form 8880 is created.
  • If the taxpayer did make a contribution, did not have a disqualifying factor, and did stay under the AGI limit, then go to the Retirement Savings Contributions Credits page [Deductions > Credits Menu > Retirement Savings Credit]; this page is partially illustrated on Pub 4012 page G-19.1.
    • In the first box, enter qualifying retirement distributions made in the prior two tax years, but not in the current tax year. (The software automatically accounts for current tax-year information.)
      • Ideally this information comes from actual prior tax returns. If those are unavailable, take the taxpayer’s word as to whether there were distributions in those years, and the (estimated) amount, but warn the taxpayer that any retirement credit on the current return might be required to be repaid if the IRS determines that distributions in either of the prior two tax years were unreported or underreported.
      • “Qualifying retirement distributions” includes distributions from IRAs, 401Ks, and similar retirement accounts. It also includes pensions where the employee could make voluntary retirement contributions.
        • Federal employees who entered service after 1987 were enrolled in the Federal Employee Retirement System (FERS), which doesn’t allow voluntary retirement contributions.
        • Similarly, U.S. military pensions are not qualifying distributions. 
    • The second box (“Enter as a negative number …”) should no longer be used. Instead, any current tax-year distribution that should not be included in Form 8880 calculations, such as a rollover, is handled by using the checkbox below box 2a on the TaxSlayer 1099-R input page. (For details, see the section 1099-R Form – Distributions from Retirement Accounts, page 36.)
    • In the third box, enter the total of current year traditional or Roth IRA contributions.
      • Do not include any traditional IRA contribution entered elsewhere; TaxSlayer automatically includes those in its calculations.
      • If you enter an amount in the third box, TaxSlayer will, when you exit the Form 8880, show that amount as “Taxpayer Contribution”, on a “list” page. This does not mean that TaxSlayer has determined that there will be a retirement savings credit on the tax return.
    • The fourth box involves deferred salary arrangements, which are out-of-scope.
  • After entering information on the Retirement Savings Contributions Credits page, you can see what Form 8880 looks like from the Credits menu – this form is one of ten for which a PDF can be created from a menu within the return.
    • You can only see the Form 8880 if TaxSlayer calculates that a retirement savings credit is applicable; if it does not, it doesn’t create Form 8880.
  • If the taxpayer meets all the requirements for the retirement credit except for being a student, TaxSlayer correctly calculates the credit as being zero, but includes a Form 8880 in the PDF of the tax return. If this form is printed as part of the taxpayer’s copy of the tax return, shred it.

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