[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text]If your income happens to be on the lower end, and you’ve still managed to put money into a retirement fund, you may be eligible to receive a tax credit.
Up to $1000 is the may be included in your upcoming tax return if you have met a few requirements and kept your money in a simple retirement account, something like an IRA or a 401k.
You can even reallocate some of your retirement funds – up to $10,000 – to use towards your first purchase of a home, all without any penalty on your taxes. As long as you pulled that money from your eligible retirement fund, it still counts.
It’s called a “Saver’s Credit” and is usually intended for single-wage earners like newly-married couples, single parents, and adults at the onset of their careers.
It is an often overlooked deduction, especially if you’re not a professionally trained accountant and do your own tax returns. And if you used a 1040EZ income tax form, you would be unable to claim this credit, as the 1040EZ form was only intended for simple returns. But now, in 2018, the 1040EZ has been discontinued, and the Saver’s Credit should be more widely known.
In order to be eligible for a Saver’s Credit, you must be at least 18 years old, not be a full-time student, and not be a dependent on someone else’s federal tax return. After that, it’s just a matter of your income in regards to how much of it you put into a retirement fund. This is for IRA contributions in 2018, up until the conclusion of the filing season, which is April 15th of this year.
The amount of your income you may claim towards the Saver’s Credit depends on a few factors, those being as a single person ($31,500) a head of a household ($47,250) or a married person whose is planning to file jointly with your partner ($63,000.)
For single people and heads of household, a 10 percent credit is what you can claim, and you can receive in contributions for your retirement fund up to $2000. Married couples can claim this credit twice, as there are two people filing, and they can receive $2000 each in their retirement funds, as well as a $400 deduction from their federal taxes.
Even if you’re slightly above the threshold for acceptable incomes, you can contribute the difference to your retirement fund and still qualify.
And the lower your income, the higher the percentage of the Saver’s Credit may be: 10%, 20%, or even 50%, as long as it ends up lower than that $2000 maximum retirement contribution. This is higher for lower earners because putting money aside for retirement is no easy task if you’re a single-earner with a relatively low salary. The incentive is to save for retirement, and 50 percent should help push you towards that.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”36197″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]
