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Saver’s Credit

Posted by attorney Henry Lively

The Saver’s Credit is provided by Internal Revenue Code Section 258, and provides a nonrefundable tax credit for contributions made by an eligible taxpayer to a qualified plan. The credit offsets both regular tax and Alternative Minimum Tax. It is also in addition to any applicable deductions.

This is a credit that is often missed by taxpayers. According to a survey conducted by Transamerica, only 12 percent of Americans eligible for this credit were actually taking the credit on their income tax returns.

The maximum annual contribution eligible for the credit is $2000. An eligible taxpayer must be:

1) 18 years or older

2) Not a full-time student or claimed as a dependent by another taxpayer

If you are eligible for this credit make sure you are not one of the 88 percent of the taxpayers that have missed this valuable credit.

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