Do I qualify for a retirement savings credit?

Written by V. Raymond Ferrara, CFP®

On April 19, 2021

Saving for retirement can be a big challenge, especially if you have lofty goals but did not start saving until later in life. These goals are even more difficult to reach if you are saving for other goals as well, such as building an emergency fund or saving for a child’s education. 

The U.S. government understands that savings for retirement is hard, which is why Uncle Sam offers the Saver’s Credit for individuals who contribute to a retirement savings account.

What is the retirement savings credit?

The Saver’s Credit is a tax break available to low- and moderate-income taxpayers who are saving for retirement. Depending on your qualification status, you could receive a tax credit of 50%, 20% or 10% on your first $2,000 of contributions into your retirement account each year. This credit is applied directly to your tax bill, reducing the total amount of income tax you owe.

You are considered eligible for the Saver’s Credit if you are:

  • Age 18 or older
  • Not claimed as a dependent by another taxpayer
  • Not a student

The amount of credit you are eligible for depends on your adjusted gross income (AGI) for the year:

Credit RateMarried Filing JointlyHead of HouseholdAll Other Filers*
50% of your contributionAGI not more than $39,500AGI not more than $29,625AGI not more than $19,750
20% of your contribution$39,501 – $43,000$29,626 – $32,250$19,751 – $21,500
10% of your contribution$43,001 – $66,000$32,251 – $49,500$21,501 – $33,000
0% of your contributionmore than $66,000more than $49,500more than $33,000

Source: IRS.gov

Talk to a ProVise CFP® professional about getting the most out of your tax advantages

At ProVise Management Group, our CERTIFIED FINANCIAL PLANNER™ professionals can get to know you and your current financial circumstances, goals, risk tolerance and personal values to help you develop a plan that works for you. We can also create a written plan for you at a fiduciary standard of care. All our written plans come with an unconditional money-back guarantee. If you are unhappy with your written plan, you can return it to us, and we will refund 100% of the fee paid.

Are you ready to talk to a professional about qualifying for a retirement savings credit and other tax advantages? Contact ProVise today to schedule a complimentary consultation.

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