f you qualify for the Saver’s Tax Credit, it can reduce your tax bill and yet, few know about it.
To be eligible to claim the Saver’s Tax Credit, you must be:
- 18 years or older
- Not a full-time student
- Not a dependent on someone else’s taxes
The amount of the credit you can receive depends on your adjusted gross income (AGI). The credit can be 50%, 20%, or 10% of your retirement plan or IRA, up to $2,000 if filing single or $4,000 if married and filing jointly.
For 2022, the adjusted gross income (AGI) eligibility requirements for the Saver’s Tax Credit are:
|Percent of your retirement savings contribution that qualifies for the Savers Credit||Married filing jointly AGI||Head of Household AGI||Single filing AGI|
|$39,001 – $42,500||$29,250 – $31,875||$19,501 – $21,250|
|$42,501 – $65,000||$31,876 – $48,750||$21,251 – $32,500|
How does the tax credit work?
The Saver’s Tax Credit is a credit for contributions made to your Traditional IRA (or other qualified retirement plan or Roth IRA). Rollovers are not eligible for the Saver’s Tax Credit. Lastly, distributions from your retirement plan should also be deducted from the total contributions when calculating your credit. For more information, please visit https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit.
Claiming the credit
To claim the credit, use Form 8880