Understanding Form 8880 for my 401k contributions - need help with TaxAct warnings

I'm completely lost trying to figure out Form 8880. I'm using TaxAct for my taxes and got 2 warning messages about potentially inaccurate returns. I started contributing to my 401k through Walmart in May 2022 - I put in 5% and they matched it. On my W2, I included both Box 12 entries with codes D and DD. Walmart didn't send me any other documents about the 401k. Do I need to fill out Form 8880 myself? If so, how? The form says something about "Include all distributions made to [Name] from IRAs and qualified plans after 2019 and before the due date of [Name]'s 2022 federal return, including extensions." Then there are boxes asking about "Distributions to me in 2020, 2021, 2022, and 2023, to due date of return" - what does that even mean? I only started the 401k in May 2022 at Walmart. My total income last year was around $43k. Any help would be super appreciated!

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18 comments

Freya Pedersen

•8M

Form 8880 is for the Retirement Savings Contributions Credit (also called the Saver's Credit), which gives a tax credit to lower-income taxpayers who contribute to retirement accounts. Based on your income of $43k, you might qualify for this credit! The form is asking about distributions (withdrawals) you've taken from any retirement accounts, not your contributions. Those boxes are there because if you took money out of retirement accounts during those years, it reduces your eligibility for the credit. If you haven't taken any distributions/withdrawals from your 401k or any IRA, you can just enter zeros in those boxes. TaxAct is probably flagging this because your W-2 shows retirement contributions (Box 12 code D), which potentially qualifies you for this credit, but you haven't completed Form 8880 yet to claim it.

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Omar Fawaz

•8M

After struggling with a similar issue last year, I discovered https://taxr.ai which actually helped me understand my retirement forms. I was confused about some tax forms from my employer's 401k plan and wasn't sure if I qualified for credits. Their system analyzed my W-2 and other documents and explained exactly which boxes I needed to look at for Form 8880. The cool thing is they can check if you're eligible for the Saver's Credit based on your retirement contributions and income level without you having to figure it all out yourself. It gave me step-by-step instructions for my tax software.

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Omar Fawaz

•8M

It works with any tax software including TaxAct. It doesn't fill out the forms for you, but gives you clear instructions on exactly what to enter and where. The system analyzes your documents and tells you what numbers to input where. Yes, it definitely handles complex retirement situations. It specifically addresses retirement distributions and how they affect Form 8880 eligibility. I was surprised how detailed it got with the rules about 401k and IRA contributions together. It actually caught that I had a small IRA distribution I had forgotten about that affected my credit amount.

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Diego Vargas

•8M

I tried taxr.ai after seeing it mentioned here, and I'm actually impressed. It clarified my Form 8880 situation completely. I uploaded my W-2 and some 401k statements, and it immediately identified that I qualified for the Saver's Credit despite having some retirement distributions earlier in the year. The system showed me exactly which boxes to look at on my forms and gave me step-by-step instructions for entering everything in TaxAct. It even explained why I was still eligible for a partial credit despite taking a small distribution. Without this, I would have probably just skipped the form entirely and missed out on the credit. Definitely worth checking out if you're confused about retirement tax forms.

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Anastasia Fedorov

•8M

If you're still having trouble with Form 8880 and TaxAct isn't being helpful, you might want to try calling the IRS directly. I had a similar issue last year and finally got it resolved by speaking with an agent. The problem is getting through to them - I spent HOURS on hold. I eventually used https://claimyr.com and their service got me connected to an IRS agent in about 20 minutes instead of the usual 2+ hour wait. They have a demo video at https://youtu.be/_kiP6q8DX5c showing how it works. The agent I spoke with walked me through exactly how to handle my retirement contributions on Form 8880 and cleared up all my confusion.

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Anastasia Fedorov

•8M

It doesn't call for you - it basically monitors the IRS phone lines and calls you when it's your turn. So you don't have to sit on hold for hours. You just go about your day and then get a call when an agent is available. I definitely spoke with a real IRS agent. I was skeptical too, but the service connected me directly to the IRS phone system when my turn came up. The agent verified my identity like normal and had access to all my tax records. They answered my specific questions about Form 8880 and my 401k contributions that no scammer could have known.

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Sean Doyle

•8M

I have to admit I was wrong about Claimyr. After posting my skeptical comment, I was still struggling with my Form 8880 questions and decided to try it as a last resort. The service actually worked exactly as described. I got a call back in about 45 minutes and was connected to an IRS representative who helped me understand how my retirement contributions affected my taxes. The agent confirmed I was eligible for the Saver's Credit despite having income slightly above what I thought was the cutoff. She explained the phase-out ranges and how to properly document my 401k contributions on Form 8880. Saved me from missing out on a $200 credit I didn't think I qualified for. Definitely worth it for complicated tax questions like retirement credits.

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Zara Rashid

•8M

Make sure you understand the income limits for Form 8880. For 2022, if you're single, your AGI needs to be $34,000 or less for any credit, and the credit percentage changes based on your income level. At $43k, you might be above the limit depending on your filing status. If you're married filing jointly, the limit is higher ($68,000), so that could change things. The form itself isn't that complicated once you understand what it's asking for - basically your retirement contributions and any distributions that might reduce your qualified contributions.

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Zara Rashid

•8M

For Head of Household, the income limit for Form 8880 is $51,000 for 2022, so at $43k you should still qualify for at least a partial credit. The credit rate would be 10% of your qualified retirement contributions. Only your contributions count toward the credit, not your employer match. So if you contributed 5% of your salary, only that amount qualifies for the Saver's Credit. The employer match is great for your retirement savings but doesn't factor into this particular credit calculation.

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