SIKESTON - Betty Cook, an employee of H&R Block in Sikeston, was recognized and her success story shared through the H&R Block's e-news system to every employee in more than 9,000 offices nationwide. Cook made a difference for a taxpayer and her future through the new tax saver's credit and an express IRA.
The Retirement Savings Contributions Credit/Saver's Credit began in 2002. Qualified individuals are allowed a nonrefundable credit for eligible contributions to an IRA or to an eligible employer-sponsored retirement plan such as a 401K plan. Qualified individuals must be at least 18 years by the end of the year, not be a dependent claimed on another person's return and not be a full-time student.
The taxpayer would have received a $2,325 refund without the "new" saver's credit. She contributed $228 into her employer's 401K, creating a $114 saver's credit and a refund of $2,439.
"I said let's see how much it would save you if you took out a $1,000 IRA," recalled Cook. The IRA was funded through her refund at the local H&R Block office with the partnership of H&R Block Financial Services.
Lowering the adjusted gross income with a traditional IRA, increased both her saver's credit and her earned income credit, resulting in a refund of $3,039. The $1,000 IRA cost the client $400 ($1,000 contribution minus $600 tax savings). Additional savings are also created on the Missouri return.
The taxpayer was happy with the additional savings and to know she now has two plans working for her retirement and the future, H&R Block officials said. They quoted her saying: "This is a good idea and I will not miss the money since I never had it anyway."
Cole added: "This is H&R Block's mission being accomplished to help our clients achieve their financial objectives by serving as their tax and financial partner."