Saver’s Credit
To encourage low- to moderate-income earners to save for retirement, a tax credit called a Saver’s Credit (Retirement Savings Contributions Credit) is available. Unlike tax deductions that reduce the amount of taxable income, tax credits reduce the actual amount of tax owed on a dollar-for-dollar basis up to some maximum limit. You are eligible for the tax credit if you are age 18 or older, not a full-time student, and not claimed as a dependent on another person’s tax return.
The tax credit is a percentage of your contributions to a traditional or Roth IRA, 401(k), SIMPLE IRA, 403(b), 501(c), and certain other employer-sponsored retirement plans. Depending on your adjusted gross income (AGI), the credit is 50 percent, 20 percent, ...
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