Are you looking for a way to boost your retirement savings while getting a little extra cash in your pocket? Look no further than the Saver’s Credit, also known as the Retirement Savings Contribution Credit. This often overlooked tax credit offered by the IRS is specifically designed to incentivize low and moderate-income taxpayers to contribute to retirement accounts like IRAs, 401Ks, and more.
What sets the Saver’s Credit apart from other tax benefits is that it is a tax credit, not just a deduction. While deductions reduce your taxable income, credits give you a dollar-for-dollar reduction in the taxes you owe, making them more valuable. However, the Saver’s Credit is non-refundable, meaning it can only be used to reduce your tax bill, potentially down to zero, but won’t result in a refund.
Despite its significant benefits, only around 12% of eligible taxpayers claim the Saver’s Credit each year, missing out on free money. As we approach the end of one calendar year and plan for the next, it’s crucial to take advantage of this credit before it’s too late.
Here are some key details about the Saver’s Credit to help you determine if you qualify and how much you could potentially save:
2024 Maximum Income Levels:
– $38,250 for single filers and married individuals filing separately
– $57,375 for heads of household
– $76,500 for married couples filing jointly
2025 Maximum Income Levels:
– $39,500 for single filers and married individuals filing separately
– $59,250 for heads of household
– $79,000 for married couples filing jointly
Determining Your Credit Amount:
– The credit amount depends on your income and contribution level
– You could receive up to $1,000 on a $2,000 contribution (doubled for joint filers)
– Complete IRS form 8880 to calculate your credit amount
Eligibility Requirements:
– Those under age 18, full-time students, dependents, and individuals above income limits are not eligible
Claiming Multiple Credits:
– You can claim both the Earned Income Tax Credit and the Saver’s Credit simultaneously
Don’t miss out on the opportunity to boost your retirement savings and lower your tax bill by claiming the Saver’s Credit. Take advantage of this valuable tax benefit and start planning for your financial future today.
