Middle and lower-income workers can earn free money through a little-known tax credit called the Retirement Savings Contributions Credit, the Saver’s Credit for short. This is a great way for you, or maybe for your adult children, to save for retirement, and get some money back from
Uncle Sam at the same time!
Here’s how it works: To be eligible for Retirement Savings Contributions Credit, you must contribute to a retirement account, not be claimed as a dependent by anyone else on their taxes, and have an adjusted gross income of $68,000 or less in 2022 as a married joint filer, $51,000 as a head of household filer, or $34,000 as any other status filer.
The Saver’s Credit is worth a maximum of $1,000 for single filers and $2,000 for married filing jointly filers. And note this is a credit, not a deduction. So you could get money back from the federal government, depending on your overall tax liability. The credit is calculated as a percentage of your contributions to your retirement accounts. (Various types of retirement plans are eligible.) The percentage varies based on your income level and filing status.
There are other details that you need to understand in order to take advantage of this tax credit, but it’s still not too late to contribute for your 2022 taxes – you can do so until April 15, 2023.
We are scheduling appointments now through March 20 for tax season. March 20 is the deadline for meetings and document drop off for Personal, C-Corp, Trust, and Sole Proprietorship Tax Returns to file by April 18 (without extension).