Question

barbara is a single taxpayer who had a 2022 adjusted gross income of $25,000 and who contributed $4,000 to her traditional ira. assuming she has a $2,000 income tax liability for the year, what is her maximum retirement contribution savings credit?

Answer 1

The maximum retirement contribution savings credit for Barbara is $200.

Contributions made by individual taxpayers to classic individual retirement accounts (IRAs) are eligible for a tax credit of up to 10%, 20%, or 50% of the taxpayer's total contribution, with a maximum allowable contribution of $2,000.

The minimum and maximum allowed incomes are revised every year.

For persons with an adjusted gross income between $21,501 and $33,000 in 2021, the saver's credit rate is 10%.

In the example of Barbara, the contribution to her regular IRA is equal to $4,000.

The credit that Saver receives is equal to ten per cent of her donation, up to a maximum of two thousand dollars.

The maximum credit for savings contributions to a retirement plan is 10% of $2,000, or $200.

To know more about individual retirement accounts (IRAs)

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