House Democrats’ budget plan aims to make up to $500 of the saver’s credit refundable—here's who would qualify (via CNBCMakeIt)
At higher incomes, the percentage taxpayers can claim declines. Individuals earning between $19,751 and $21,500 can claim 20% of their contribution, while those earning $21,501 to $33,000 can 10% of their contribution. The credit phases out completely for individuals earning more than $33,000 and couples earning more than $66,000.
Currently, the saver's credit is nonrefundable, which means that while the credit can reduce taxes owed, it can't be provided as a refund. This doesn't help many in need, especially those with low incomes who owe little to no taxes.would expand the credit's current income parameters and allow for up to $500 of the credit to be refundable for certain taxpayers.Savers qualify for the credit based on two factors: Their income level and their retirement contribution amount.
Under the new proposal, savers could receive up to $500 as a deposit in their retirement account after they claim the credit on their tax return. Even taxpayers with little to no tax liability would be eligible to recieve the refund in their retirement account. To be eligible for the $500 refund, eligible savers must contribute at least $1,000 to retirement savings.
Though these changes would potentially help those eligible, nothing is set in stone yet. Lawmakers still must vote on the federal budget plan before any provisions, including that of the saver's credit, are set.
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