By: Luis Diaz
By: Luis Diaz
The saver’s credit is a tax credit that can be claimed by low and middle income taxpayers who contributed to a retirement account during the tax year, which will allow them to have some cash at their disposal.
The credit has a value of up to $ 1, 000 dollars for individuals and a maximum of $ 2, 000 dollars for a married couple filing a joint tax return. The taxpayer may be a candidate for the saver’s credit if his adjusted gross income is below the allowed limits.
$ 60, 000 annual dollars is the limit for a married couple filing joint return for 2021, $ 66, 000 dollars for 2022. $ 49, 500 dollars for a head of household filing a declaration for 2021, $ 51, 000 dollars for 2022.
According to the Internal Revenue Service (IRS) the saver’s credit can be received for making eligible contributions to your IRA or sponsored retirement plan by the employer . In addition, as of 2018, if you are designated as a beneficiary, you may be eligible for a credit for contributions to a ABLE account, which is focused on people with disabilities.
A survey by the Transamerica Center for Retirement Studies found that only the 38% of US workers are aware of this tax exemption to which several citizens may be eligible.
To be eligible, the applicant must have at least 18 years old, can not be a student full-time and cannot be declared a dependent on someone else’s tax return.
Now, if the interested party was a student during before a period of five calendar months of the tax year, then, it must be indicated that he was enrolled as a full-time student at a school or was part of a full-time farm training course offered by a school or state, county, or local government agency.
A school includes polytechnic, professional and industrial schools. It does not include on-the-job training courses, correspondence schools, or schools that offer courses only through the internet.
Depending on your adjusted gross income reported on your series form 1040, the amount of the credit is 50% , 20% or 10%. The percentage will depend on the contributions you make to a traditional or Roth individual retirement savings arrangement (IRA).
Additionally, eligible contributions may be reduced by any recent distributions the taxpayer received from a retirement plan or an IRA arrangement or an ABLE account.
You may also be interested in: Child Tax Credit: those who did not receive payments can be claimed in the next tax season