An IRS Incentive To Save For Retirement
North American Precis Syndicate
The Saver’s Credit—an overlooked tax credit made available by the IRS to eligible taxpayers—could make saving for retirement more affordable than many people realize. (NAPS)
(NAPSI)—Tips for claiming the Saver’s Credit:
1. Check Your Eligibility
Depending on your filing status and income level, you may qualify for a
nonrefundable credit of up to $1,000 (or $2,000 if filing jointly) on your
federal income taxes for that year when you contribute to a 401(k), 403(b),
457(b) or similar retirement plan, or IRA.
To be eligible, the maximum Adjusted Gross Income (AGI) for single filers
is $31,500 in 2018 and $32,000 in 2019. For the head of a household, the AGI
maximum is $47,250 in 2018 and $48,000 in 2019. For those who are married and
file a joint return, the AGI maximum is $63,000 in 2018 and $64,000 in 2019.
You must be 18 years or older by January 1 and cannot be a full-time
student or be claimed as a dependent on another person’s tax return.
2. Save for Retirement
Save for retirement in your employer’s retirement plan, if offered, or in
an IRA. In general, for every dollar you contribute to a qualified retirement
plan or IRA (up to the lesser of the limits permitted by an
employer-sponsored plan or the IRS), you defer that amount from your current
overall taxable income on your federal tax returns—and you may also qualify
for the Saver’s Credit. After-tax contributions, such as those made to a Roth
IRA or Roth 401(k), are also eligible for the credit. You have until April
15, 2019 to make a contribution to an IRA for tax year 2018.
3. File Your Tax Return and Claim
When you prepare your federal tax returns, you can claim your Saver’s
Credit by subtracting this tax credit from your federal income taxes owed.
Workers who are eligible to claim the Saver’s Credit are also eligible to
take advantage of the IRS Free File program for taxpayers with an AGI of
$66,000 or less. Twelve commercial software companies make their tax
preparation software available through the Free File program at www.irs.gov/FreeFile.
• If you are using tax preparation software, use Form 1040 or Form 1040NR.
If your software has an interview process, be sure to answer questions about
the Saver’s Credit, also referred to as the Retirement Savings Contributions
Credit and/or Credit for Qualified Retirement Savings Contributions.
• If you are preparing your tax returns manually, complete Form 8880, the
Credit for Qualified Retirement Savings Contributions, to determine your
exact credit rate and amount. Then transfer the amount to Schedule 3 (Form
1040) or Form 1040NR.
• If you are using a professional tax preparer, be sure to ask about the
• Consider having any refund you receive directly deposited to an IRA to
further boost your retirement savings.
The 19th Annual Transamerica Retirement Survey found that 62
percent of American workers are unaware that the Saver’s Credit exists. Don’t
overlook this important tax credit; it may help you pay less in your current
federal income taxes while saving for retirement. Spread the word—perhaps
friends and family are eligible for this incentive but are unaware of it.
For more details and resources on the Saver’s Credit in English and
Spanish, visit Transamerica Center for Retirement Studies® at www.transamericacenter.org/saverscredit.
TCRS is a division of Transamerica Institute®, a nonprofit,
Retirement Survey found 62 percent of American workers are unaware of the Saver’s
Credit, an overlooked tax credit that could make saving for retirement more
On the Net:North American Precis Syndicate, Inc.(NAPSI)