How To Claim the Saver’s Tax Credit!
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Length: approx. 1 min. 30 sec.
A retirement savings contribution credit, also known as a saver’s credit, is “a nonrefundable tax credit worth up to $1,000” and can be claimed alongside any existing tax deductions. Those who want to take advantage of the saver’s credit must meet several qualifications.
First, you need to have a low to moderate income. Specifically, your “adjusted gross income” must not exceed “$36,500 in 2023 or $38,250 in 2024”. You also need to be contributing at least $2,000 into a retirement account. A 401(k), a traditional IRA, Roth IRA, and ABLE account are some of the retirement plans that can help you qualify. Finally, if you are a student or “dependent on someone else’s tax return”, then you are ineligible for the saver’s credit.
Those who do qualify can earn up to “$1,000 for individuals or $2,000 for a married couple”. While the saver’s credit is not the same as a tax deduction, it actually operates better. Tax deductions can only “[reduce] the amount of your income that is subject to taxes”, while a saver’s credit “reduces your actual tax bill dollar-for-dollar”.
In 2027, the saver’s credit will become the saver’s match. A saver’s match is a “matching contribution deposited into the taxpayer’s IRA or retirement account.
It is never too early to start saving up for retirement. Those who begin early are rewarded with benefits such as the saver’s credit. If you want to learn about more ways to save money this tax season, and to prepare your tax return accurately, reach out to our experts at XQ CPA for guidance. We are here to help you.
Phone: 832-295-3353
Online Booking: https://xqcpa-bookme.acuityscheduling.com/schedule.php
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