The Saver’s Tax Credit: Nice To Know About, Although Few Do
Have you heard of the “Saver’s Credit”? It’s existed since 2001, but if it’s news to you, you’re not alone.
We understand why.
If you qualify, it’s a great deal. For every dollar you put into retirement savings, you can take a tax credit for up to half the amount – up to $1,000 for individual filers, and $2,000 for a couple filing jointly. The credit is available even if you made a pre-tax retirement plan contribution. This means you can score two tax-saving benefits for one retirement savings contribution. Qualified accounts include company retirement plans, IRAs, and ABLE accounts.
The catch? To qualify, you must be 18+, not a full-time student, and not claimed as a dependent. For single-filers, your Adjusted Gross Income (AGI) cannot exceed $32,500 in 2020, or $65,000 if you’re married filing jointly. The closer you get to these limits, the less credit you receive. Also, it’s a non-refundable credit, which means you can only use it to offset taxes owed; you don’t get to claim any leftover credit as cash.
If none of this applies to you, don’t stop reading here! Who do you know who may qualify? Your adult children just starting out? Your employees? Friends or family? To a degree, your own financial stability may well depend on theirs. Besides, low-income households need to be saving for retirement, and can use every break they can get to do so.
So, think about it, and help spread the word on this important Saver’s Credit. It’s worth knowing about.
John A. Frisch, CPA/PFS, CFP®, AIF®, PPC™ founded Alliant Wealth Advisors in 1995 and has over 30 years of experience as a financial professional. In his free time, he’s an avid long-distance runner, a sport that requires discipline, patience and vision. John applies these same skills to his professional pursuits: He helps families and retirement plan sponsors adopt a patient, disciplined approach to overcoming financial challenges and reaching their distant goals along a clear path. Learn more at www.alliantwealth.com.