By Jessica Searcy Kmetty
Are you taking advantage of the Saver’s Credit? According to the 19th Annual Transamerica Retirement Survey, only 29% of workers with household income less than $50,000 even know about this credit, and only about 12% of eligible taxpayers actually claim it.
Officially the Retirement Savings Contributions Credit (Saver’s Credit), the IRS defines the Saver’s Credit as a tax credit for making eligible contributions to your IRA or employer-sponsored retirement plan. You must be 18 or older, cannot be a full-time student or claimed as a dependent on someone else’s tax return.
Beginning in 2018, if you’re a designated beneficiary you may be eligible for a credit for contributions to your Achieving a Better Life Experience (ABLE) account.
Although it is a nonrefundable credit, meaning it can’t provide you with a tax refund, it can be subtracted from any taxes you may owe, possibly down to zero.
There are adjusted gross income limits that impact the credit, and any filing more than $65,000 for married individuals filing a joint return (or $32,500 for single filers) receives 0% of the contribution. For details on these limits and additional information about the Saver’s Credit, visit HERE.
Sources:
- https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit
- https://www.transamericacenter.org/docs/default-source/retirement-survey-of-workers/tcrs2019_sr_19th-annual_worker_compendium.pdf
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The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.
Published for the blog on May 18, 2020 by Allos Investment Advisors, LLC.
