Need a Tax Break?

Need a Tax Break?

Print Friendly, PDF & Email


You may be eligible for a valuable incentive, which could reduce your federal income tax liability, for contributing to your company’s 401(k) or 403(b) plan. If you qualify, you may receive a Tax Saver’s Credit of up to $1,000 ($2,000 for married couples filing jointly) if you made eligible contributions to an employer sponsored retirement savings plan. The deduction is claimed in the form of a non-refundable tax credit, ranging from 10% to 50% of your annual contribution.

Remember, when you contribute a portion of each paycheck into the plan on a pre-tax basis, you are reducing the amount of your income subject to federal taxation. And those assets grow tax-deferred until you receive a distribution. If you qualify for the Tax Saver’s Credit, you may even further reduce your taxes.

Your eligibility depends on your adjusted gross income (AGI), your tax filing status, and your retirement contributions. To qualify for
the credit, you must be age 18 or older and cannot be a full-time student or claimed as a dependent on someone else’s tax return.

Use the link below to calculate your credit for the tax year 2023. First, determine your AGI – your total income minus all qualified deductions. Then refer to the link below to see how much you can claim as a tax credit if you qualify.

With the Tax Saver’s Credit, you may owe less in federal taxes the next time you file by contributing to your retirement plan today!


Distributions before the age of 59 ½ may be subject to an additional 10% early withdrawal penalty. This is for informational purposes only; we suggest that you speak with a tax professional about your individual situation.

Source: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit

Print Friendly, PDF & Email


Related Posts

Smart Portfolio Stress Testing: Your Retirement Safety Net

Smart Portfolio Stress Testing: Your Retirement Safety Net

You've been diligent—saving, monitoring retirement accounts, consulting your advisor. But are you prepared for life's uncertainties? Your retirement plan relies on assumptions: savings, investment duration, inflation, and returns. Life, however, loves throwing...

Are you over age 50?

Are you over age 50?

Consider making a catch-up contribution to your retirement! If you contribute $7,500 each year from age 50 to age 67 (17 years), you can make a big impact on your future. When am I eligible to make a catch-up contribution?If you turn age 50 anytime in the calendar...

Risk-proofing Your Future:Personal Protection Strategies

Risk-proofing Your Future:Personal Protection Strategies

Are you prepared for a secure financial future? Discover some key aspects of a comprehensive risk management strategy. Disability Income Protection: Protect your income by obtaining disability income protection. Purchase it when you are young and healthy, considering...

Share

Share this post.