The tax filing deadline is just about here, but if your employer staffs low-income earners, it wouldn't be a bad idea as a benefits manager to encourage a filing extension or a last-minute contribution to an IRA—that is, if the worker hasn't yet filed their taxes.

Here's why. The IRS allows for an individual to take a tax credit of up to $1,000 ($2,000 if filing jointly) for making contributions to an IRA or employer-sponsored retirement plan. The credit reduces the amount of income tax retirement savers may owe.

The last day to make an eligible IRA contribution is April 17—filing deadline.

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The "Saver's Credit" can also be claimed for contributions to a 401(k), SIMPLE IRA, SARSEP, 403(b), 501(c)(18) and governmental 457(b) plans, and your voluntary after-tax employee contributions to your qualified retirement and 403(b) plans.

Here's are the rules for this credit:

The individual claiming the credit must be:

  1. Age 18 or older
  2. Not a full-time student
  3. Not claimed as a dependent on another person's return
  4. With an adjusted gross income not more than:
  • $56,500 if your filing status is married filing jointly (for 2011; $57,500 for 2012),
  • $42,375 if your filing status is head of household (for 2011; $43,125 for 2012), or
  • $28,250 if your filing status is single, married filing separately, or qualifying widow(er) (for 2011; $28,750 for 2012).

To claim the credit, you will need to fill out Form 8880 (PDF) and attach it to your Form 1040A or 1040.

Statistics show it's hard to get low-income workers to participate in a retirement plan, let alone contribute substantially. These lower income workers would probably rather have the wages to put toward living expenses instead of deferring them.

And then there's the belief that low-wage earners get very little tax benefit versus higher earners. All it took was a popular Time magazine cover story to crucify the 401(k) and label it null for anyone making less than $100,000. So any incentive—even if it's last minute before tax deadline—to sock away just a little bit more should definitely be noted.

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