Saver’s Credit: The Saver’s Credit is a non-refundable tax credit available to eligible taxpayers who contribute to a qualified retirement plan, such as a 401(k) or an IRA. This credit is designed to encourage low- to moderate-income individuals to save for retirement.
To qualify for the Saver’s Credit, taxpayers must meet certain income limits and contribute to a qualified retirement account. The credit is worth up to 50% of contributions, depending on the taxpayer’s adjusted gross income (AGI) and filing status. For example, a single filer with an AGI below a specified threshold may receive a credit equal to 50% of their contributions, whereas a filer with a higher AGI may only qualify for a 10% or 0% credit.
The maximum contribution considered for the credit is $2,000 for individuals and $4,000 for married couples filing jointly. This means the maximum credit can be $1,000 for individuals and $2,000 for couples, significantly reducing their overall tax liability.
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