Need a reason to Join the TSP? How about an extra $2000 tax credit!
Here is the scoop. The Thrift Savings Plan (TSP) Participants’ Tax Credit:
Employees who participate in the TSP during tax years 2002 through 2006, may be eligible for a tax credit of up to $2,000 on their Federal Income tax return for each year they contribute to the plan. This “Saver’s Tax Credit” is available to participants with an adjusted gross income (Bottom line of the front of the 1040) of no more than $50,000 if married filing jointly, $37,500 if head of household, or $25,000 if single or married filing separately. (adjusted gross incomeThe percentage of contributions you get as a tax credit is 10%, 20%, or 50%, depending on your adjusted gross income. (taken from About.com)
For example (using base pay with no bonuses):
- E-5 Married with 11 or less years in could be entitled to a 50% credit (max $2,000)
- E-3 not married with less than 4 years could be entitled to a 20% credit (max $2,000)
- E-7 Married with 17 or less years could be entitled to a 10% credit (max $2,000)
Get the idea? Contact your tax advisor for more information.
If you missed this credit (I did), you will need to post an amendment to your income tax. (again talk to your tax advisor) You will need to file an amended or corrected return using Form 1040X, Amended U.S. Individual Income Tax Return. Include copies of any schedules that have been changed or any Forms W-2 you did not include. You should wait to receive your first check before you file your 1040X, but do not wait longer than 3 years from the original due date of your return.
Below is my supporting information.
_______________Taken from Motley Fool ________________