The Retirement Savings Contributions Credit, also known as the Saver's Credit, is a tax credit available to taxpayers who contribute to a qualified retirement plan or IRA. The credit is designed to encourage low- and moderate-income taxpayers to save for retirement and is worth up to $1,000 for individuals and $2,000 for married couples filing jointly.
To be eligible for the Saver's Credit, taxpayers must meet the following requirements:
In addition, taxpayers must have earned income from employment or self-employment, and their income must fall within certain limits. The income limits for the Saver's Credit vary based on the taxpayer's filing status and the tax year. For example, in 2021, the income limits for the Saver's Credit are:
The amount of the credit is based on the taxpayer's contributions to a qualified retirement plan or IRA, as well as their income. The credit is equal to a percentage of the taxpayer's contributions, with the percentage ranging from 10% to 50%. The higher the taxpayer's income, the lower the percentage of the credit they will receive.
It's a good idea to consult with a tax professional or refer to IRS guidelines to determine whether you may be eligible for the Saver's Credit and how much you may be able to claim.
