The Retirement Savings Contributions Credit, or "Saver's Credit," can give and additional tax credit for low- to- moderate income taxpayers who save for retirement. The Credit can also give an immediate tax incentive for contributing to a Roth or other non-deductible account.
This video describes the credit, who is eligible for the credit, and how the credit is calculated and reported on the tax return.
2022 UPDATE:
AGI phaseout ranges for the Savers Credit:
$41,000 - $68,000 (MFJ); $30,750 - $51,000 (HOH); $20,500 - $34,000 (S, MFS, QSS)
ADDITIONAL INFORMATION AND RESOURCES:
To learn more about 401(k) plans, click here:
To learn more about the difference between traditional and Roth retirement accounts, click here:
To learn more about IRA contributions, click here:
IRS Form 8880: "Retirement Savings Contributions Credit":
irs.gov: "Retirement Savings Contributions Credit (Saver's Credit)" (Covers additional details not given in the video):
nerdwallet.com: "Saver's Credit: What it is and How it Works":
The Tax Geek on Twitter: @taxgeekusa
The Tax Geek on Reddit: www.reddit.com/r/askataxgeek
Intro Music: "Bluesy Vibes" - Doug Maxwell - YouTube Audio Library
Background and Outro Music: George Street Shuffle, Kevin McLeod, via YouTube Audio Library
DISCLAIMER: This video is for educational and informational purposes only. It is not intended to render tax advice or investment advice for individual situations. If you have questions regarding your particular situation, please consult with a qualified tax or investment professional.
The tax information in this video is based on tax law and IRS regulations in place when this video was published, and is subject to the whims of Congress....(read more)
LEARN MORE ABOUT: Qualified Retirement Plans REVEALED: How To Invest During Inflation HOW TO INVEST IN GOLD: Gold IRA Investing HOW TO INVEST IN SILVER: Silver IRA Investing
Get a Double Tax Benefit for Retirement Savings with the "Saver's Credit" Retirement saving is crucial to ensure a secure financial future. However, not everyone realizes that they can receive a double tax benefit for their retirement savings through a little-known tax credit called the "Saver's Credit." This valuable credit helps qualifying individuals reduce their taxes while encouraging them to save for retirement. The Saver's Credit, also known as the Retirement Savings Contributions Credit, was introduced by the IRS to encourage low- and moderate-income individuals to save more for their retirement. It provides a tax credit to eligible workers who contribute to a retirement account, such as a 401(k), IRA, or other qualified plans. The primary goal of this credit is to incentivize individuals who might not otherwise save for retirement due to financial constraints. By providing a tax break, the Saver's Credit aims to make it more affordable for these individuals to start contributing to a retirement savings account. The credit is available to individuals over the age of 18 who are not full-time students or dependents on someone else's tax return. Additionally, there are income limits to qualify for the credit. For the tax year 2021, the maximum adjusted gross income (AGI) limits are $66,000 for married couples filing jointly, $49,500 for heads of household, and $33,000 for singles or married individuals filing separately. The amount of the credit varies based on your filing status, AGI, and the amount of your qualified retirement contributions. The credit ranges from 10% to 50% of the amount contributed, up to a maximum of $1,000 for individuals or $2,000 for married couples filing jointly. For example, let's say you are a single individual with an AGI of $30,000 and contribute $2,000 to your retirement account. You would be eligible for a 50% credit on your contributions, so you would receive a tax credit of $1,000. This means you not only reduced your taxable income by $2,000 but also received an additional $1,000 credit toward your taxes. It's essential to note that the Saver's Credit is a non-refundable credit, meaning it can only reduce your tax liability to zero. Any excess credit cannot be refunded to you. The credit can be used to reduce any federal income tax you owe, including both regular income tax and alternative minimum tax. To claim the Saver's Credit, you need to file IRS Form 8880, which calculates the credit amount based on your contributions and income. It's important to keep documentation of your contributions to your retirement account, such as your annual statement, as proof when filing your taxes. Taking advantage of the Saver's Credit can provide a significant boost to your retirement savings. Not only will you grow your nest egg for the future, but you'll also enjoy immediate tax savings. It's a win-win situation that can help you build a secure financial foundation for your retirement years. Whether you're just starting in your career or have been saving for retirement for years, it's crucial to explore all available tax advantages. The Saver's Credit is a valuable tool that can make a substantial difference in your retirement savings journey. Take advantage of this benefit and consult a tax professional to ensure you are maximizing it to its fullest potential. https://inflationprotection.org/maximize-your-retirement-savings-with-the-savers-credit-and-enjoy-a-double-tax-benefit/?feed_id=132763&_unique_id=64f5c0a4a13cb #Inflation #Retirement #GoldIRA #Wealth #Investing #401k #FederalIncomeTaxes #form8880 #ira #retirementsavingscontributioncredit #RothIRA #Saver’sCredit #QualifiedRetirementPlan #401k #FederalIncomeTaxes #form8880 #ira #retirementsavingscontributioncredit #RothIRA #Saver’sCredit
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