401 K Contribution Credit

Last tax year of 2021, my 401 K contribution amount was the same as this tax year of 2022.

In 2021 a received a tax credit of $394.00. This year I am only receiving a tax credit of $79.00.

Can anyone please explain why such a difference in credit from one year to next with same amounts of contribution?

681

Expert Alumni

Apr 11, 2023 5:03:46 PM

If you received a Saver's Credit in 2021 for your 401K Contribution, the amount of the credit is based on your income.

Even though you made the same 401K contribution amount in 2022, if your income is higher than 2021, the credit is reduced.

You can see how the credit was calculated on Form 8880.

Here's more info on Form 8880.

Level 3

Apr 11, 2023 5:13:31 PM

There is only a $3000 difference between last tax year and this tax year as far as income.

Amazed at how that little difference in income can make such an impact on a tax credit, e.g. administration?