IRS offers several tax break options and many taxpayers are not aware of all packages.
A similar one is the tax break offer from IRS to those having retirement accounts. If you are eligible for this one, you could save up to $2,000 on your tax bill. Low- and moderate-income Americans who are saving for retirement can avail of this tax break.
It is known as the Saver’s Credit and its previous name was Retirement Savings Contributions Credit.
Under this program, the tax will get reduced or even eliminated for eligible persons.
Saver’s Credit can help reduce tax bill up to $1,000 for individuals and $2,000 for couples.
The objective of this program is to offer yet another incentive for Americans to save money for their retirement. According to some studies, many people are not saving enough for their retirement.
However, many people are not aware of Saver’s Credit and hence not taking advantage of it.
This year, the credit is available for more American taxpayers because the IRS has raised the income range of eligible people.
A married couple can claim the credit if their adjusted gross income (AGI) is $68,000 or less in 2022. In 2021, the income limit was $66,000.
If you are the head of a household, your income should be $51,000 or less in 2022. The figure for the same last year was $49,500.
For all others who are filing, the AGI should be $34,000 or less in 2022. It was fixed at $33,000 in 2021.
However, the Saver’s Credit will not offer you a tax refund because it is a non-refundable tax credit.
Still, it can reduce the tax you owe to zero depending on your AGI.
You will have to use Form 8880, Credit for Qualified Retirement Savings Contributions to claim the credit.