Take Saver’s Credit to Reduce Your Tax Bill

The Retirement Savings Contribution Credit or the Saver’s Credit is a tax credit of up to $2,000 for married filing jointly and worth up to $1,000 for individual taxpayers. This credit is calculated as a percentage of the qualifying amount the taxpayer has contributed to their retirement savings. This allows taxpayers with the least income to enjoy the highest rate.

You can use this credit if you make eligible contributions to an employer sponsored retirement plan or to an individual retirement agreement (IRA). Eligibility for this tax credit also depends upon your filing status and the amount of your yearly income.

If you haven’t yet filed your tax return this year, you should check if you are eligible for this tax credit. The eligibility criteria are:

           Married filing separately or a single taxpayer with income up to $29,500
           Head of household with income up to $44,250
           Married filing jointly with income up to $59,000
           You are at least 18 years of age
           You are not claimed as a dependent on another person’s tax return
           You were not a full-time student at any time during 2013

You can only claim this credit if you have contributed to a 401(k) or a similar workplace plan by the end of 2013. If you haven’t, you can contribute to an IRA by the due date of your tax return (April 15), and it will be counted for the year 2013.

To claim the Saver’s credit, you need to file Form 8880, Credit for Qualified Retirement Savings Contributions.

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