Nearly two in three American workers do not know about the Tax Credit for Retirement Savers, the Transamerica Center for Retirement Studies learned in a survey.
The Saver’s Credit, also referred to as the Retirement Savings Contributions Credit, is a non-refundable tax credit of up to $1,000 for single filers and $2,000 for married couples that can be applied to the first $2,000 of voluntary contributions that a worker makes to a company-sponsored retirement plan or to an individual retirement account (IRA).
Under current regulations, to qualify for the credit, single filers should have an adjusted gross income (AGI) of $31,000 in 2017 and $31,500 in 2018. For the head of a household the AGI limit is $46,500 in 2017 and $47,250 in 2018, and for married couples who file a joint return, the AGI limit is $62,000 in 2017 and $63,000 in 2018. Additionally, the filer cannot be a full-time student or be claimed as a dependent on another person’s tax return. The credit is not available on the Internal Revenue Service Form 1040EZ but is available on Form 1040, Form 1040A or Form 1040NR.
Additionally, workers are eligible to claim the Saver’s Credit may be eligible for the IRS’s free tax filing program. They need to have an AGI of $66,000 or less to qualify.
“As a tax credit, the Saver’s Credit is an important incentive to save for retirement in a 401(k), 403(b) or IRA,” says Catherine Collinson, president of the Transamerica Center for Retirement Studies. “By saving for retirement and claiming the credit, taxpayers may be able to lower their federal income taxes. Millions of Americans who are already saving for retirement could be missing out on the Saver’s Credit simply because they don’t know it exists.”
The Transamerica Center for Retirement Studies has created fact sheets and articles in English and Spanish about the Saver’s Credit. These are available at www.transamericacenter.org/saverscredit. More information can be found at www.irs.gov.
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