Question

in 2017 cal will take 5000 distribution from traditional IRA for purchase of his first home. he willmake 4000 elective deferral into his employer's 401 k plan. how much savers credit in 2017 if AGI IS 34500 AND HE IS SINGLE

0

400

800

1000

Answer 1

Taxability of distribution from traditional IRA:

Generally distribution from traditional IRA are taxable in the year you withdrawn before attainment of retirement age.
Further distributions from Traditional IRA’s that you include in income are taxed as ordinary income subject to regular income tax rates and also penalty as applicable.
Distributions may also fully or partially taxable depending upon whether your IRA includes any non-deductible contributions.
However, one exception to the early withdrawal penalty on IRA distribution is the purchase of first home.

In the current situation distribution from IRA for purchase of first home not subject to additional tax (Penalty) but liable to regular taxes as applicable.

Calculation of saver’s credit in 2017

• Assesse will be eligible for savers credit if he is

           1) Age 18 or older

           2) Non-full time student and

          3) Not claimed as dependent on another person’s return.

2017 Saver's credit:

Credit Rate	Married filling jointly	Head of House hold	All Other Fillers
50% of your contribution	AGI not more than $37,000	AGI not more than $27,750	AGI not more than $18,500
20% of your contribution	$37,001 - $40,000	$27,751 - $30,000	$18,501 - $20,000
10% of your contribution	$40,001 - $62,000	$30,001 - $46,500	$20,001 - $31,000
0% of your contribution	more than $62,000	more than $46,500	more than $31,000

As in the current situation he is single and not head of household he will fall under all other filers category and his AGI is more than 31000 so his credit rate is 0% of his contribution.

He is not eligible for any savers credit in 2017 as his AGI is more than 31000.