Tax Credits For Retirement Savings

Tax Credits For Retirement Savings



Tax Credits for Retirement Savings
It is​ a​ well-known fact that Americans are miserable failures when it​ comes to​ saving for retirement .​
Well,​ the​ government is​ offering tax credits to​ change this for some of​ us.
Tax Credits for Retirement Savings
Social security is​ going to​ be under siege as​ baby boomers hit retirements .​
Fortunately,​ many baby boomers have put away piles of​ cash in​ 401ks and IRAs .​
Regardless,​ most people fail to​ do all they can in​ this regard .​
In an​ attempt to​ motivate us taxpayers to​ save as​ much as​ we can for retirement,​ Uncle Sam is​ dangling tax credits before us like the​ proverbial carrot .​
The tax credit in​ question is​ the​ Retirement Savings Contributions Credit .​
Qualify for it​ and you​ may be eligible to​ take a​ credit of​ $1,​000 for singles and $2,​000 if​ you’re filing jointly .​
The credit is​ eligible for those that make contributions to​ 401ks and retirement vehicles .​
The amount of​ the​ credit is​ determined on​ a​ sliding scale based on​ how much you​ make and contribute .​
You can claim the​ retirement savings tax credit:
1 .​
Individual taxpayers with incomes of​ $25,​000 or​ less.
2 .​
Individual taxpayers that are head of​ households and make $37,​500 or​ less.
3 .​
Married couples filing jointly who make $50,​000 or​ less cumulatively .​
There are some very minor restrictions regarding who is​ eligible for the​ tax credit .​
First,​ you​ have to​ be older than 18 .​
Second,​ you​ can’t be a​ full time student .​
Finally,​ another dependent can’t claim you​ as​ a​ dependent on​ their tax returns .​
Importantly,​ this tax credit is​ in​ addition to​ other tax advantages you​ gain from piling money into a​ retirement account .​
With a​ 401k,​ for instance,​ you​ can pound in​ pre-tax earnings,​ which cuts down your adjusted gross income for the​ tax year .​
Once you​ figure out your taxes,​ you​ can then deduct another $1,​000 or​ so for the​ tax credit .​
Put another way,​ saving for your retirement is​ a​ no brainer .​
The federal government is​ practically begging you​ to​ put away money for retirement .​
With this tax credit,​ there is​ absolutely no reason to​ fail to​ comply.




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