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Home » IRA's, Retirement Planning, Taxes

Saver’s Tax Credit Qualifications for 2015 and 2016

Last updated by on April 19, 2016

Free money is great, so this post has been updated for the 2015 and 2016 tax years.

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 offers to incentivize low and moderate income taxpayers to make retirement contributions to an IRA, 401K, 403B, 457B, or any other IRS recognized retirement account.

What is nice about the Saver’s Credit is that it is an actual tax credit – not merely a tax deduction. If you’re not sure how the two differ, a tax deduction simply subtracts the value from your taxable income and you pay taxes on the remaining taxable income. A tax credit, on the other hand, actually gives you the entire dollar value back or subtracts the value from the taxes you owe – making it far more valuable monetarily than a deduction. In the case of the Saver’s Credit, it is non-refundable, meaning it can only be subtracted from the taxes you owe, possibly down to zero, but it can’t provide you with a tax refund.

Unfortunately, due to its limited popularity (and a serious lack of retirement contributions), only about 12% of eligible taxpayers actually claim this tax credit – which is a damn shame, since it is so advantageous!

Still, there’s people out there taking advantage of the Saver’s credit. According to the IRS, in tax year 2012, the most recent year for which complete figures are available, saver’s credits totaling $1.2 billion were claimed on more than 6.9 million individual income tax returns. Saver’s credits claimed on these returns averaged $215 for joint filers, $165 for heads of household and $127 for single filers.

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 2015, while starting to plan ahead for 2016.

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 small bit of effort to determine how much of a credit you will receive, but don’t let that deter you – if you are eligible, the result is 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. Or check out the contribution tables here.

Once you figure out the amount of the credit from form 8880, add it to Form 1040 (PDF), or on Form 1040A (PDF).

The 2015 and 2016 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.

savers credit

Maximum Income Level to qualify for the Saver’s Credit in 2015:

The AGI (adjusted gross income) limit for the saver’s credit is:

  • $30,500 for single filers and married individuals filing separately
  • $45,750 for heads of household
  • $61,000 for married couples filing jointly

Maximum Income Level to qualify for the Saver’s Credit in 2016:

The AGI (adjusted gross income) limit for the saver’s credit is:

  • $30,750 for single filers and married individuals filing separately
  • $46,125 for heads of household
  • $61,500 for married couples filing jointly

Saver’s Credit Eligibility

The following individuals are not eligible for the Saver’s credit:

  1. Those under age 18.
  2. Full-time students (enrolled as full-time for 5 months and over in a calendar year).
  3. Those claimed as dependent on another person’s return.
  4. Those at income levels above the aforementioned limits.

Are Contributions to a myRA Account Eligible for the Saver’s Credit?

Yes. Check out the myRA plan details for more info.

Am I Eligible for Both the Earned Income Tax Credit and the Saver’s Credit?

Yes, the Earned Income Credit (EIC) and the Saver’s Credit can be simultaneously claimed.

Saver’s Credit Discussion:

  • Have you ever claimed the Retirement Savings Contribution Credit (Saver’s Credit)?

Related Posts:

About the Author
I am G.E. Miller, & this is my story. My goal is financial independence ASAP. If you share that goal, join me & 10,000+ others by getting FREE email updates. You can also explore every post I have written, in order.

  • Geoff says:

    So, I thought the percentage phase out was a percentage of the 2000/4000 credit, but it is a percentage of your contribution? So if I remain under $61,500 for married-joint and contribute 20,000 to retirement accounts, I will receive a 2,000 credit? I should hit more than that this year, hopefully stay under the threshold.

  • Tim says:

    It is a damn shame people don’t take advantage of this… I can’t tell you how many people I’ve offered to pay for and open an IRA for if they will give me the credit they get back… and they don’t even want to go thru it… I’m paying them double basically to jump start their retirement.. youngsters just don’t get it..

  • JB says:

    I’m curious how eligibility is determined if one spouse is a student and the other is not and they file jointly.

    • Daniel says:

      I’m wondering the exact same thing. I opened a Roth IRA for myself in the spring thinking I’d get this credit, then realized I can’t because I’m a grad student. But I think if I open another one for my (non-student) wife, we can still get the credit even though we are married filing jointly?

      • Bill says:

        The IRS instructions are not clear in this situation. However, I think the most logical approach would be to leave column (a) blank on form 8880 and only fill-in column (b) for your spouse. Your maximum possible credit would therefore be only $1000 instead of $2000.

  • Amanda M. says:

    I have never qualified, however next year, I plan to “retire” from my day job and volunteer with the Peace Corps. Since I will only be working 3 months, I should qualify. It should make for a good 2016 tax return in 2017 (I’m planning to increase my W-2 exemptions substantially to get that money through the 3 months I’m working, instead of depending on the return the next year).

  • kim says:

    I tried filing only to get rejected because the system still says $60,000 when it’s suppose to be $61,000 this year. I was told it wasn’t anything I did but they were working with the IRC to fix it and could take a week or little longer. So much for filing early.

  • Destiny says:

    Hi im having trouble. For my box 12 on my W2 I have amounts for 12a, 12b, 12c.. when I try and do my h&r block taxes online it says : enter box 12 amounts” does that mean I have to add all three (a,b,c) together? hmm

  • Shannon says:

    I meet all the requirements for the Saver’s Credit, but my mother made the contribution for me. Would I still qualify for the credit? I can’t seem to find this scenario anywhere. Thanks!

    • Ron Harvey says:

      The IRA needs to be in your name, so if your mother made the contribution for you, and it’s solely your account, who’s to know? But you can’t get a tax credit for more than you paid in taxes. And you can’t have been a full-time student for any part of 5 calendar months of the tax year. And, as I’m sure you know, there’s an eligibility limit to how much you’ve earned for the year. Check out Form 8880. It’s pretty simple and you’ll find out soon enough how much,if anything, you’ll be credited for.

  • doglover says:

    I am married filing jointly, I put over the 2000 limit in my 401K
    can I put the remainder into column b (spouses column line 2) to claim the other 2000 for joint. My wife did not contribute to a 401K.

  • P says:

    “Saver’s credits claimed on these returns averaged $215 for joint filers, $165 for heads of household and $127 for single filers.”

    How can they average less than $200, especially the single filers, when the minimum you’ll get is either $200 or $0?

  • joseph says:

    At one point you say that the Saver’s Credit is non refundable, that is not what the IRS says about that credit.

    It is actually refundable. Thus if you have no tax liability then you can get paid by the IRS upto 50% of what you put into your IRA.
    You can do that every year.

    • G.E. Miller says:

      Where does the IRS say that?

      “Maximum credit. This is a nonrefundable credit. The amount of the credit in any year cannot be more than the amount of tax that you would otherwise pay (not counting any refundable credits) in any year. If your tax liability is reduced to zero because of other nonrefundable credits, such as the credit for child and dependent care expenses, then you will not be entitled to this credit.”


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