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Retirement Savers Credit

The retirement savers tax credit, also known as the saver's credit, is a tax break available to certain US taxpayers who contribute to qualified retirement accounts.  Here's a breakdown:

Who is eligible?

  • You must have earned income and file a Form 1040, 1040-SR, or 1040-NR tax return.

  • Your adjusted gross income (AGI) must be below specific limits, which vary depending on your filing status:

  • Single: $36,500 or less

  • Head of household: $54,750 or less

  • Married filing jointly: $73,000 or less

  • You cannot be claimed as a dependent on someone else's tax return and you cannot be a full-time student.

What contributions qualify?

  • Contributions to traditional or Roth IRAs

  • Elective salary deferrals to employer-sponsored plans like 401(k), 403(b),governmental 457(b), SARSEP, or SIMPLE plans

  • Certain voluntary after-tax contributions to qualified retirement plans

  • Contributions to an ABLE account for which you are the designated beneficiary (up to $14,000 for 2023)

How much is the credit?

  • The credit is a percentage of your qualified contributions, up to a maximum:

  • 50% for certain low-income taxpayers

  • 20% for moderate-income taxpayers

  • 10% for higher-income taxpayers eligible for the credit

  • The maximum dollar amount of the credit is:

  • $1,000 for single filers and heads of household

  • $2,000 for married couples filing jointly

How do I claim the credit?

  • Use Form 8880 to figure out the amount of your credit.

  • Claim the credit on your tax return (Schedule 1 for Form 1040).

  • The credit is non-refundable which means it can only reduce the tax liability that you owe. If you don't owe any tax, you wouldn't qualify for the credit.

If you need help or have additional questions, I'm here for you. Comment below or reach out via email

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