A federal tax credit many overlook
Have you heard about the Saver's Credit? It's a money-saving tax perk that most Americans don't know about.
If you contribute to a employer-sponsored retirement plan, such as a 401(k) or 403(b) or have a traditional or Roth IRA, you may qualify.
"This is free money, a tax credit,” said Todd Campbell, with The Motley Fool. "It allows you to sock away money in your retirement accounts and then take a credit off of your tax bill in April.”
To qualify for the Saver's Credit you must be 18 or older and meet income requirements. If you’re single, your adjusted gross income (AGI) for 2017 cannot exceed $31,000. If you’re married and filing jointly, your AGI cannot be more than $62,000. For 2018, those AGI limits increase to $31,500 and $63,000, respectively. If your income is above those levels, or you're a full-time student or a dependent on someone else's tax return, you can't take the credit.
"You can take a credit for up to 50 percent of the money that you put into those accounts with a cap of $1,000 if you're single or $2,000 if you're married,” Campbell explained.
You don't have to itemize to claim this credit, but it's not available to you if you file a 1040EZ.
Remember: You can still make a 2017 contribution to a traditional IRA or Roth IRA until April 17.
More Info: The Tax Credit Nobody Knows About