What is the maximum amount of contributions on which the Saver's Credit may be based?

The Saver's Credit, officially known as the Retirement Savings Contributions Credit, provides a tax credit for eligible individuals who contribute to retirement accounts such as IRAs or 401(k)s. The maximum contribution amount on which the credit can be calculated is indeed $2,000 for each individual or spouse who qualifies.

This means that if two eligible spouses are contributing, they could potentially have a total of $4,000 in contributions that qualify for the Saver's Credit collectively. However, the credit is applied based on the maximum of $2,000 per individual or spouse, making option B the correct choice.

It is essential for tax preparers to understand this limit to accurately assist clients looking to take advantage of the Saver's Credit and to ensure that they stay within IRS guidelines regarding retirement contributions.