Retirement Savings: The Saver’s Credit Explained

The Saver’s Credit is worth a certain percentage you contribute to a qualifying retirement plan, depending on your adjusted gross income (AGI) and filing status. Here are the AGI limits for claiming the Saver’s Credit in 2020:

  • 50% credit, or up to $1,000 for individuals or $2,000 for married couples filing jointly — AGI below $19,500 for individuals, $29,250 for heads of household, or $39,000 for married couples filing jointly.
  • 20% credit, or up to $400 for individuals or $800 for married couples filing jointly — AGI between $19,501 and $21,250 for individuals, $29,251 and $31,875 for heads of household, and $39,001 and $42,500 for married couples filing jointly.
  • 10% credit, or up to $200 for individuals or $400 for married couples filing jointly — AGI between $21,251 and $32,500 for individuals, $31,876 and $48,750 for heads of household, and $42,501 and $65,000 for married couples filing jointly.

For example, if you’re single, earn $19,000, and contribute $1,000 to an eligible retirement account, your Saver’s Credit would be $500. If you’re married and file jointly, earn $40,000, and contribute $3,000 to an eligible retirement account, your Saver’s Credit would be $600. And if you’re a head of household, earn $45,000, and contribute $2,000 to an eligible account, your Saver’s Credit would be $200.

Other qualification criteria for claiming the Saver’s Credit include the following:

  • You must be at least 18 years old.
  • You cannot be a full-time student.
  • You cannot be claimed as a dependent on anyone else’s tax return.
  • Contributions cannot be rollovers from an existing account.

How to Claim the Saver’s Credit

If eligible, you will claim the Saver’s Credit on IRS Form 8880, which you’ll attach to IRS Form 1040 or 1040A when you file your tax return. Note: You cannot claim the Saver’s Credit if you file IRS Form 1040EZ.

View single page >> |

Disclosure: Free tools, such as the ones offered through Personal Capital, can give insight into your whole ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.