Qualifying for the Saver’s Tax Credit in 2012 and 2013
What is the Saver’s Credit?
The Saver’s Credit (aka the ‘retirement savings contribution credit‘) is a lesser known, highly advantageous tax credit that the IRS makes available to low and moderate income taxpayers who make retirement contributions to an IRA, 401K, or any other government recognized retirement account.
This is an actual tax credit, not merely a deduction. If you’re not sure how the two are differentiated – a deduction simply subtracts the value from your taxable income and you pay taxes on the remaining taxable income. A credit actually gives you the entire dollar value back or subtracts the value from the taxes you owe – making it far superior to a deduction. In the case of the Saver’s Credit, it is non-refundable, meaning it can only subtract from taxes you owe.
As we’re nearing the end of a calendar year, we’re at an important crossroads of still being able to take advantage of the Saver’s Credit in 2012 and start thinking ahead to 2013.
How much is the Saver’s Credit?
The short answer is that it depends on your income level and your contribution amount. It will take a bit of effort to determine how much of a credit you will receive, but don’t let that deter you – it’s free money!
The absolute most you could receive in a given year is $1,000 on a retirement contribution of $2,000 (double those numbers if married and filing jointly). In order to figure out what kind of credit you are eligible to receive, you will have to fill out IRS form 8880 (PDF), as the credit phases out at certain income levels.
Once you figure out the amount of the credit from form 8880, add it to Form 1040 (PDF), or on Form 1040A (PDF).
The 2012 and 2013 versions of these forms have not yet been released, but income eligibility and phaseout limits have gone up slightly. I’ve highlighted the maximum income levels to qualify below.
Maximum Income to Qualify for the Saver’s Credit in 2012:
The AGI (adjusted gross income) limit for the saver’s credit is:
- $57,500 for married couples filing jointly
- $43,125 for heads of household
- $28,750 for married individuals filing separately and for singles
To quality for the Saver’s Credit in 2013:
The AGI (adjusted gross income) limit for the saver’s credit is:
- $59,000 for married couples filing jointly
- $44,250 for heads of household
- $29,500 for married individuals filing separately and for singles
Saver’s Credit Eligibility
The following folks are not eligible for the Saver’s credit:
- Those under age 18.
- Full-time students (5 months and over in a calendar year).
- Those claimed as dependent on another person’s return.
- Those at income levels above the aforementioned limits.
Saver’s Credit Discussion:
- Have you ever claimed the Retirement Savings Contribution Credit (Saver’s Credit)?
- Will you claim the credit in 2012?
Related Posts:
I am G.E. Miller, & 
I’ve always made “enough” to qualify for this credit but have never been out of school long enough to take it!
It is always discouraging to me that these credits are only available for certain individuals. I understand it is important to not allow certain individuals earning a significant salary to take advantage of this credit, but 57,500 for married filing jointly is ridiculous.
Great article and I hope those that frequent your site and are eligible to take it do so.
I just found out about this last week by reading my retirement brochure and promptly adjusted my savings amount. My AGI was just $770 above the 2013 level, and my savings level was just under the $2000 minimum by about $400. A few changes later and whallla! I should be getting this tax credit. It means an extra $100 out of my pay check, and my student loans being pushed back 1 month, but should be worth it! Thanks for talking about it, doesn’t seem to be a lot of information out there!