What you need to know about retirement savings tax credits
When it is time to prepare for taxes, everyone looks for ways to reduce their taxable income as much as possible so they do not end up owing as much. However, reducing your taxable income is not the only way to get the most out of the tax season. If you have been contributing to a retirement account, you may be eligible for retirement saving tax credit (saver’s credit).
Saver’s credit is a tax credit worth up to $1,000 for single filers or $2,000 for married couples filing jointly. This is designed to help taxpayers who save diligently for their retirement to have some relief from what they owe in taxes for the year.
Who is eligible for retirement savings credit?
Essentially, the saver’s credit is meant to assist low- and mid-income taxpayers who are contributing to their retirement account. To be eligible for retirement savings credit, you must meet the following criteria:
- You are age 18 or older.
- You are not claimed as a dependent on someone else’s return.
- You are not a student.
Additionally, if your adjusted gross income (AGI) is above any of these thresholds in 2021, you will not be eligible for saver’s credit:
- $66,000 for married filing jointly.
- $49,500 for head of household filing.
- $33,000 for all others.
Depending on how much you contributed, you may receive the full amount of the credit or only a portion of it. Please refer to this information from the IRS to see what type of credit you may qualify for when filing taxes.
Talk to a ProVise CFP® professional about managing your financial and retirement planning
When preparing for tax season, you might realize there is a lot you did not know about in the financial world. In circumstances like these, you should turn to the people who do, like our team at ProVise Management Group.
Our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.
Are you ready to talk to a professional about planning for your retirement? Contact ProVise today to schedule a complimentary consultation.