Saver’s Tax Credit

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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.

Hence, this concludes the definition of Saver’s Tax Credit along with its overview.

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