The tax code is full of ways to lower to your taxes. The Saver’s Credit (formerly the Retirement Savings Contribution Credit) is a tax credit for something we should be doing anyways, saving for retirement. This is on top of the great tax benefits already offered by retirement plans. With a little tax planning you can turn this tax credit into big savings.
What Is It?
The Saver’s Credit helps those taxpayers who save for retirement but are on the lower end of the income scale. Consider it a reward for being a responsible saver, in that it helps offset part of your contributions each year.
Here’s how it works. The Saver’s Credit offsets 50%, 20%, or 10% of the first $2,000 ($4,000 if married filing jointly) of your retirement contributions each year. That gives you up to a maximum tax credit of $1,000 ($2,000 if married filing jointly) each year. Continue Reading…