Most Americans can save $2,000 a year from little-known tax break

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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.

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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.

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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

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