Americans looking to tuck away some extra cash next year can take advantage of an oft-overlooked tax break recently updated by the Internal Revenue Service to reduce their liability next year.
The retirement savings contribution credit – frequently shortened to the saver’s credit – provides up to $1,000 in credit to low- and middle-income Americans who are setting money aside in a retirement-specific account. Married couples can claim up to $2,000.
Taxpayers are eligible to take advantage of the credit so long as they are over the age of 18, are not a student and are not claimed as a dependent by anyone else. In order to claim it, individuals must contribute to either an IRA or an employer-sponsored retirement account. That encompasses any contribution made to a 401(k), 403(b), governmental 457(b), as well as any after-tax contribution made to a Thrift Savings Plan.
There are also income thresholds limiting who is able to claim the tax credit. The new maximum income amounts for anyone to claim the saver’s credit in 2022 are $34,000 for single filers, $68,000 for married couples filing jointly and $51,000 for heads of households.
www.foxbusiness.com/personal-finance/americans-save-updated-tax-credit