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Are you eligible for the IRS Saver's Credit?

The Saver's Credit is a special tax break the IRS allows for low- and moderate-income taxpayers who are saving for retirement. It's in addition to other retirement saving benefits.

"The Saver's Credit is a "non-fundable" credit. In other words, it can reduce the tax you owe to as little as zero, but it won't give you a tax refund."

If you qualify, you might be able to claim a tax credit for 50%, 20% or 10% of the first $2,000 ($4,000 if married and filing jointly) you contribute during the tax year to a retirement saving account. The IRS calls The Saver's Credit a "non-fundable" credit. In other words, it can reduce the tax you owe to as little as zero, but it won't give you a tax refund.

So who's eligible?

  • Age 18 or older
  • Not a full-time student and
  • Not claimed as a dependent or another person's return

The Saver's Credit is available for your contributions to a traditional or Roth IRA, 401(k), SIMPLE IRA, SARSEP, 403(b), 501(c)(18), or governmental 457(b) plan. Employer contributions cannot be claimed toward The Saver's Credit.

Here's the IRS Savers Credit for 2016*

CREDIT RATE MARRIED FILING JOINTLY HEAD OF HOUSEHOLD ALL OTHER FILERS**
50% OF CONTRIBUTION AGI NOT MORE THAN $37,000 AGI NOT MORE THAN $27,750 AGI NOT MORE THAN $18,500
20% OF CONTRIBUTION $37,001 - $40,000 $27,751 - $30,000 $18,501 - $20,000
10% OF CONTRIBUTION $40,001 - $61,500 $30,001 - $46,125 $20,001 - $30,750
0% OF CONTRIBUTION MORE THAN $61,500 MORE THAN $46,125 MORE THAN $30,750

*IRS.gov, May 2016
**Single, married filing separately, or qualifying widow(er)

There are other restrictions, such as for rollover contributions and any recent distributions from your retirement accounts, so be sure to talk to your tax advisor.

Here are some online resources to help you get started:

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