Maximizing Tax Benefits with the Saver’s Credit
Essential Criteria for Claiming the Saver’s Credit
According to The Motley Fool, planning for retirement can be difficult but the Saver’s Credit offers valuable help for low-and-moderate-income taxpayers. For 2024 contributions to a qualified retirement plan like a 401(k) or Roth IRA could earn a tax credit of up to $2,000. Only 47% of U.S. workers are aware of this credit which reduces the amount of taxes owed but does not provide a refund if the credit exceeds the tax bill. Understanding and meeting the requirements is essential to benefit fully from this opportunity.
To claim the Saver’s Credit you must be at least 18, not claimed as a dependent and not a full-time student. Contribute to a qualified retirement account (401(k), 403(b), IRA, or Roth IRA) by December 31, 2024 (for employer-sponsored plans) or April 15, 2025 (for IRAs). The annual contribution limits are $7,000 for those under 50 and $8,000 for those 50+. Meet these criteria to claim the Saver’s Credit and enjoy tax benefits while growing your retirement savings.
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$2,000 Tax Credit Awaits: Unlock the Saver’s Credit for 2024 and Boost Your Retirement Savings! (PHOTO: Money Talks News)
Income Thresholds for Maximizing the Saver’s Credit
The Saver’s Credit percentage you can claim depends on your income, with thresholds set at 50%, 20%, and 10% of your contributions. For instance married couples filing jointly can receive a 50% credit if their AGI is up to $46,000, a 20% credit for AGIs between $46,001 and $50,000, and a 10% credit for AGIs between $50,001 and $76,500. If your AGI exceeds these thresholds you won’t qualify for the credit. Monitoring your income throughout the year and understanding these thresholds is crucial to maximizing your tax savings and bolstering your retirement funds, thereby securing your financial future.
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