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Definition: Saver’s Tax Credit
Earlier known as the Retirement Savings Contributions Credit, the Saver’s Credit gives a unique tax break for low and middle-income taxpayers who have been saving money for their retirement. This credit is over and above the other tax benefits for saving in a retirement account. If one qualifies, a Saver’s Credit can decrease or sometimes eliminate one’s tax bill.
Unknowingly, most of the eligible taxpayers do not take advantage of this break because they are not aware of it. Only a limited percentage of workers in US with annual incomes less than $50,000 are aware of the Saver’s Credit. The quantity of the credit will depend on the adjusted gross income of the individual or household and the enormity of the contribution.
A taxpayer have reached 18 years of age to be eligible for the credit. Individuals that are full-time students, were full-time students for at least five months of the year, or registered as dependents are generally not eligible.
$2000 is the highest possible contribution which can be accounted for this credit as per regulations. The rules and regulations are different for families with incomes in other brackets.