Personal Account Login
Remit Online
Secure Document Upload
Contact Us

The Saver's Credit: It Pays to Save for Retirement

We want to shed light on a valuable financial resource available to you: the Saver's Credit. This often overlooked tax credit is designed to encourage low- to moderate-income individuals to save for retirement while reducing their tax burden. Understanding how the Saver's Credit works can help you maximize your savings potential and help secure a brighter financial future.

WHAT IS THE SAVER'S CREDIT?

The Saver's Credit, also known as the Retirement Savings Contributions Credit, is a tax credit available to eligible taxpayers who contribute to a qualified retirement savings plan, such as a 401(k), 403(b), or IRA. This credit directly reduces the amount of federal income tax you owe, making it a valuable incentive for saving for retirement.

HOW DOES IT WORK?

The amount of the Saver's Credit depends on your filing status, adjusted gross income (AGI), and the amount of your eligible contributions to retirement savings plans. The credit ranges from 10% to 50% of your contributions, up to a maximum credit of $1,000 for individuals or $2,000 for married couples filing jointly.

For 2023 (taxes filed in 2024), it can be claimed by:

  • Single (or married filing separately) individuals with incomes up to $36,500

  • Heads of households with incomes up to $54,750

  • Married couples filing jointly with incomes up to $73,000

In addition, to be eligible for the credit, you must:

·      Be at least 18 years old.

·      Not be a full-time student.

·      Not be claimed as a dependent on someone else's tax return.

HOW CAN SERVANT SOLUTIONS HELP?

As a member of Servant Solutions, you have access to free financial planning services and resources to help you navigate your financial journey. Our team of experts is here to provide guidance on maximizing your retirement savings, understanding tax benefits like the Saver's Credit, and planning for a secure future.

The Saver's Credit can be a valuable tool allowing you to keep more of the income you earn. In order to claim it and calculate the exact amount of your credit, complete Form 8880 with your tax return. You can find more information here on the IRS website.