Tax savers credit.

[gman]

Taxpayer has 1099r from Defense Finance US military pay. Spouse has other income and social security that would qualify her for the tax savers credit. Military distribution will not disqaulify her from that credit, right? I believe it is one exception to the distribution disqualifier.

[appelman]

It sounds right to me.

It's listed as an exception.

[FEDUKE404]

Color me confused

If you are talking about the Retirement Saver's Tax Credit, that is only good for funds going INTO a retirement account, not those being paid by the fund.

(Or did you just not mention someone is also placing qualifying funds into such an account?)

I assume you are talking about Form 8880 ?

[Gary2]

I had the same confusion at first.

I believe the issue is that funds taken out of a retirement plan are normally subtracted from the amount of money put into retirement plans for the purposes of the 8880. However, military retirement plans are an exception. Hence someone receiving $5K from a military retirement plan and putting $2K into a retirement plan can get credit for the $2K contribution.

[FEDUKE404]

Now I see!

I had the same confusion at first.

I believe the issue is that funds taken out of a retirement plan are normally subtracted from the amount of money put into retirement plans for the purposes of the 8880. However, military retirement plans are an exception. Hence someone receiving $5K from a military retirement plan and putting $2K into a retirement plan can get credit for the $2K contribution.

Since we are kinda talking about the same thing (Form 8880 and especially line 4 of that form), I feel much better now.

For a while there I was having a Rip Van Winkle moment thinking something completely new on the tax front had perhaps fallen out of the sky.

Thanks for the (likely) explanation!

FE