What is the eligible saver's credit for a single individual with an AGI of $15,000 who contributed $400 to a traditional IRA?

To determine the eligible saver's credit for a single individual with an AGI of $15,000 who contributed $400 to a traditional IRA, it's important to understand how the saver's credit works. The saver's credit, also known as the Retirement Savings Contribution Credit, is designed to incentivize individuals to save for retirement by offering a tax credit based on their contributions to eligible retirement accounts, including IRAs.

The amount of the credit is based on a percentage of the contributions made to retirement accounts, and it varies depending on the taxpayer's AGI and filing status. For a single individual with an AGI of $15,000, they fall into the category that qualifies for a 50% credit rate, as their income is below the threshold for higher credit rates.

In this case, the individual contributed $400 to a traditional IRA. To calculate the saver's credit, you take 50% of that contribution amount. Therefore, 50% of $400 equals $200, making that the available saver's credit for this individual.

This credit directly reduces tax liability dollar for dollar, which can significantly benefit those who qualify. Understanding the income limits and contribution amounts is crucial when calculating the saver's credit, and in this situation, the proper