If you are not familiar with the saver’s credit, then stop
what you are doing right now because this is definitely a credit worth knowing
about...one that could end up drastically cutting your tax bill.
The credit was designed to try and encourage people to save
more for retirement, something that everyone really should be doing. Through
this credit, low to moderate income individuals and couples can receive a tax
credit worth as much as 50% of their retirement contributions in many cases.
Thus, the more you save for retirement, the less you will pay in taxes, or, if
you prefer and qualify, you can put the credit toward an increased refund. What
could be better?
So, Are You Eligible?
Obviously, this tax credit sounds pretty great, and it
definitely is...if you qualify. Your income is the main factor in determining
if you are eligible for the saver’s credit, and, if so, how much of a credit
you can get.
For single, married filing separately or widowed filers,
your adjusted gross income must be between $18,250 or less and $30,500- any
more and you won’t qualify. Your credit percentage is based on your exact
income as detailed below:
l 10%
credit for income levels between $19,751 and $30,500
l 20%
credit for income levels between $18,251 and $19,750
l 50%
(full) credit for income levels below $18,251
Here are the breakdowns for heads of household:
l 10%
for incomes between $29,626 and $45,750
l 20%
for incomes between $27,376 and $29,625
l 50%
for incomes below $27,375
For married filing jointly individuals, the breakdowns are:
l 10%
for incomes between $39,501 and $61,000
l 20%
for incomes between $36,501 and $39,500
l 50%
for incomes below $36,500
If you qualify for or think you could qualify for this
credit, even if not for the whole 50%, be sure to bring this up with your tax
adviser or preparer so that you can make the most of this awesome tax credit
while boosting your savings in the process!