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But sometimes, that can seem impossible.
One solution, however, is the Retirement Savings Contribution Credit.
Its available to many filers, depending on theirIRS tax brackets.
Heres what you should know.
What Is the Retirement Savings Contribution Credit?
This effectively boosts your retirement savings while reducing your tax burden, making it a a win-win.
Do I Qualify for the Retirement Savings Contribution Credit?
Heres a rundown of the criteria for the tax year 2024.
Income Limits
The credit is intended for low- and moderate-income earners.
It should be said, however, that a good retirement plan usually includes one of these accounts.
How Does the Retirement Savings Contribution Credit Lower Your Tax Bill?
Instead, theRetirement Savings Contribution Credit valuevaries based on your filing status and income level.
This results in amaximum tax creditof $1,000 ($2,000 if married filing jointly).
This would effectively make your retirement contributions cheaper while lowering your tax burden by $1,000.
Thats the power of the Retirement Savings Contribution Credit.
Why Is a Tax Credit Better Than a Tax Deduction?
This means that you pay taxes on a smaller income amount.
Given this structure, a tax credit is more beneficial than a deduction of the same amount.
How Does the Qualified Retirement Savings Contribution Credit Work?
At least it shouldnt be if you want a decent chance at success.
Here issome general adviceby decade from experts, and how the Qualified Retirement Savings Contribution Credit fits in.
In your 20s
This is when you might take the most risk with your retirement savings.
For instance, your portfolio could be made up of 60% or more of stocks.
If your employer matches retirement contributions, take full advantage.
TheQualified Retirement Savings Contribution Creditis a powerful one.
FAQ
Takeaway
Finding and working with a financial advisor is a great idea.
A financial advisor will help keep track of your finances and assist you in attaining your financial goals.
Get to know your Financial Advisor options today for Free!
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