This credit feature can help you save tax up to $2000

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If you look to save for your retirement life, you could save up to $2000 off your tax bill by using a little-known tax break feature from IRS in 2022 as well.

The feature is likely to be expanded next year to include more Americans, reports said.

The tax break is now known as Saver’s Credit and its previous name was Retirement Savings Contributions Credit.

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Low- and moderate-income Americans who save for their retirement can use this tax break.

Those who are eligible for Saver’s Credit would be able to reduce their tax bills. In some cases, people would not have to pay taxes according to their eligibility.

The credit has the feature to cut the tax bills of eligible people to $1,000 for individuals, while couples can look for relief of up to $2000.

The objective of this program is to give Americans another incentive to save money for retirement.

However, this credit feature is not available for a lot of taxpayers. Many of them even don’t know such a feature exists. But the IRS has increased the eligibility of income range for Saver’s Credit for next year. This will benefit a large section of taxpayers.

In order to claim the credit, your adjusted gross income should be $68,000 or less in 2022 if you are married and filing jointly. The same amount was fixed at $66,000 in 2021. In case you are filing as head of household, your AGI should be $51,000 or less in 2022 when compared with the corresponding amount of $49,500 in 2021.

One advantage of the Saver’s Credit is that it can reduce the tax you owe to zero. However, a big disadvantage is that you won’t get a refund because the program is set up as a non-refundable tax credit. Considering the present financial crisis, the tax credit feature offers hope for a lot of people.

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