The Saver’s Credit is available to eligible taxpayers who are saving for retirement through a qualified retirement plan at work or in an IRA. The Saver’s Credit is a non-refundable tax credit, available to workers age 18 or older who have contributed to a 401(k), 403(b) or similar employer-sponsored retirement plan, a traditional or Roth IRA, or an ABLE account in the past year.
The amount of the credit is 50%, 20% or 10% of the first $2,000 of voluntary contributions an eligible taxpayer contributes to an eligible account.
The maximum credit is $1,000 for single filers or individuals and $2,000 for married couples filing jointly, and the Adjusted Gross Income (AGI) requirements are as follow:
- Single tax filers: maximum AGI of $32,500 in 2020 or $33,000 in 2021
- Heads of households: maximum AGI of $48,750 in 2020 or $49,500 in 2021
- Married filing jointly: a maximum AGI of $65,000 in 2020 or $66,000 in 2021
Additionally, in order to be eligible, the filer cannot be a full-time student and cannot be claimed as a dependent on another person’s tax return.
You only get credit if you file for it. If you are using tax preparation software to prepare your tax return, this credit could be referred to as the Retirement Savings Contributions Credit.
Make sure you get credit for saving for retirement!
Please contact your local Kemper office if you have questions or need additional information.