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February 17, 2023
New Mexico’s Legal & Financial Weekly
Vol. 10.103 No. 7
FORECLOSURE SALES: 0 PROBATE: 32 AUCTIONS: 8 NOTICE OF SUITS: 4 OTHER: 39 SPANISH NOTICES: 0
Are You Eligible To Claim The IRS Saver’s Credit?
T
he IRS offers an incentive to lower your tax bill when you save for retirement. Many taxpayers may be eligible to claim the Saver’s Credit, but they may not know that it exists. Also referred to as the Retirement Savings Contributions Credit, the Saver’s Credit can reduce federal income taxes for eligible taxpayers who save for retirement through a qualified retirement plan, such as a 401(k) or an Individual Retirement Account (IRA). The 23rd Annual Transamerica Retirement Survey finds that fewer than half (49 percent) of workers are aware of the Saver’s Credit. “People who are saving for retirement may be able to claim the Saver’s Credit and reduce their federal taxes,” says Catherine Collinson, CEO and president of nonprofit Transamerica Institute® and its Center for Retirement Studies. “Some people may be confusing the tax credit with the tax-advantaged treatment of retirement accounts. The idea of a double tax benefit may sound too good to be true, but both are available to eligible savers.” What Is the Saver’s Credit?
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Roth IRAs are also eligible, and you have until April 18, 2023 to make an IRA contribution for tax year 2022. Rollover contributions are not eligible for the credit. 3. File Your Tax Return and the Saver’s Credit
Claim
Let the IRS help you file your federal taxes with its Free File program. The program’s eight partners offer online tax preparation tools, free, to taxpayers with an AGI of $73,000 or less. More at www.irs.gov/FreeFile.
The Retirement Savings Contributions Credit is a non-refundable tax credit • When using an online tax preparation for contributions an eligible taxpayer tool, be sure to answer questions about makes to a 401(k), 403(b) or similar the Saver’s Credit, also referred to by employer-sponsored retirement plan, a the IRS as the Retirement Savings Contributions Credit, and Credit for traditional or Roth IRA, or an ABLE (Achieving a Better Life Experience) account. In this context, “non-refundable” means the credit cannot exceed Qualified Retirement Savings Contributions. a person’s federal income tax for the year. The maximum credit is $1,000 If you prepare your tax return manually, complete Form 8880, Credit for single filers or individuals and $2,000 for married couples filing jointly. • According to TCRS’ analysis of IRS data, the average amount of the Saver’s for Qualified Retirement Savings Contributions, to determine your exact credit rate and amount. Then transfer the amount to line 4 on Schedule 3, Credit in 2020 was $186. which is used with Forms 1040, 1040-SR, and 1040-NR. Tips for claiming the Saver’s Credit • If you use a professional tax preparer, be sure to ask about the Saver’s Credit. 1. Check Your Eligibility To be eligible, the maximum Adjusted Gross Income (AGI) for single filers “Saving consistently over time is fundamental to achieving a financially is $34,000 in 2022 and $36,500 in 2023. For the head of a household, the secure retirement,” says Collinson. “Another way to help boost your savings AGI maximum is $51,000 in 2022 and $54,750 in 2023. For those who are is to directly deposit your tax refund into an IRA. Saving more now could married filing jointly, the AGI maximum is $68,000 in 2022 and $73,000 in help you reap more later.” 2023. Remember, this important tax credit may help reduce what you owe in You must be 18 years or older by January 1 and cannot be a full-time federal taxes or increase your refund. Be sure to check your eligibility. Help student or be claimed as a dependent on another person’s tax return. spread the word about the Saver’s Credit by telling family, friends, and Consider using the IRS’ online tool to help determine if you are eligible for colleagues. the Saver’s Credit. For more details and resources on the Saver’s Credit in English and Spanish, visit Transamerica Institute at www.transamericainstitute.org/SaversCredit 2. Save for Retirement or the IRS at www.irs.gov. -(NAPSI) To claim the Saver’s Credit on your 2022 tax return, you must have contributed to a 401(k), a 403(b), or similar employer-sponsored retirement Transamerica Center for Retirement Studies® is an operating division of plan, or an ABLE account during 2022. Contributions to traditional or Transamerica Institute®, a nonprofit, private foundation.