Most Workers Don’t Know This Retirement Tax Credit Exists

Most Workers Don’t Know This Retirement Tax Credit Exists
Photo by Cameron Whitman / Shutterstock.com

Tax season is now well underway. But as in years past, millions of taxpayers are probably still missing out on the chance to slash their tax bill by as much as $4,000 simply because they overlook a little-known federal tax credit.

It’s known as the Saver’s Credit. If you’re eligible for it, the credit is worth as much as 10 to 50 percent of your retirement plan contributions, according to the IRS. The maximum dollar amount of the credit is $2,000 — or $4,000 for married people filing joint tax returns.

And yet, 62 percent of workers are unaware of this credit, according to a recent survey from the Transamerica Center for Retirement Studies.

Your eligibility for the credit depends largely on your income.

To be eligible for the Saver’s Credit for tax year 2018 — or the tax return due in April — you must:

  • Be an adult who is not a full-time student and not claimed as a dependent on someone else’s tax return.
  • Have an adjusted gross income of no more than $63,000 for married people filing jointly, $47,250 for people filing as heads of household and $31,500 for all other taxpayers.
  • Contribute to an eligible retirement plan (listed below).

The percentage of your retirement contributions that are eligible for the Saver’s Credit also depends on your income and tax filing status. Click the IRS link above for a breakdown.

Contributions to certain retirement plans are eligible for the Saver’s Credit. Those are:

  • Traditional IRA
  • Roth IRA
  • 401(k)
  • SIMPLE IRA
  • SARSEP
  • 403(b)
  • 501(c)(18) or governmental 457(b) plan

For more tax breaks you might be overlooking, check out “Tax Hacks 2019: Did You Miss These 7 Credits and Deductions?

Had you heard of the Saver’s Credit before? Let us know below or on Facebook.

Learn everything you need to plan your dream retirement

The Only Retirement Guide You'll Ever Need gives you the knowledge you need to retire on your own terms. Sure, you can pay a financial adviser, but this online course gives you total control to create a custom retirement plan around the things that make you happy.

You're going to get expert, personalized advice. You'll have access to the latest tools. And when it's complete, you'll be able to approach your retirement confidently and with peace of mind.

It's time to plan the best years of your life. Let's get started.

Read Next

How to Start Investing in Real Estate With as Little as $500
How to Start Investing in Real Estate With as Little as $500

If you would like to diversify your portfolio by investing in real estate but don’t have the cash to buy property, you should know about this option.

5 Ways to Avoid Taxes on Social Security Income
5 Ways to Avoid Taxes on Social Security Income

Here’s how to minimize and delay the chunk that Uncle Sam claims.

It’s Worth Paying Extra for These 7 Items
It’s Worth Paying Extra for These 7 Items

Open your wallet a little wider for these things, and it will be money well-spent.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Comments

Trending Stories