CAAB

Investing in People, Strengthening Communities

Save Twice with the Saver's Credit

If you are a low-to-moderate income worker, you can take steps now to save two ways for the same amount. With the saver’s credit you can save for your retirement and save on your taxes with a special tax credit. Here are six tips you should know about this credit:

Save Twice with the Saver's Credit

If you are a low-to-moderate income worker, you can take steps now to save two ways for the same amount. With the saver’s credit you can save for your retirement and save on your taxes with a special tax credit. Here are six tips you should know about this credit:

  1. Save for retirement.  The formal name of the saver’s credit is the retirement savings contributions credit. You may be able to claim this tax credit in addition to any other tax savings that also apply. The saver’s credit helps offset part of the first $2,000 (or $4,000 for married couples) you voluntarily save for your retirement. This includes amounts you contribute to IRAs, 401(k) plans and similar workplace plans.

  2. Save on taxes.  The saver’s credit can increase your refund or reduce the tax you owe. The maximum credit is $1,000, or $2,000 for married couples. The credit you receive is often much less, due in part because of the deductions and other credits you may claim.

  3. Income limits.  Income limits vary based on your filing status. You may be able to claim the saver’s credit for Tax Year 2017 if you’re a:
    • Married couple filing jointly with income up to $62,000 in 2017.
    • Head of Household with income up to $46,500 in 2017.
    • Married person filing separately or single with income up to $31,000 in 2017.

  4. When to contribute.  If you’re eligible you still have time to contribute and get the saver’s credit on your 2017 tax return. You have until April 15, 2018, to set up a new IRA or add money to an existing IRA for 2017. You must make an elective deferral (contribution) by the end of the year to a 401(k) plan or similar workplace program.

  5. Special rules apply.  Other special rules that apply to the credit include:
    • You must be at least 18 years of age.
    • You can’t have been a full-time student in 2017.
    • Another person can’t claim you as a dependent on their tax return.

  6. Visit IRS.gov.  You figure your credit amount based on your filing status, adjusted gross income, tax liability and the amount of your qualified contribution. Other rules also apply. For more information visit IRS.gov.

 

About Capital Area Asset Builders

Capital Area Asset Builders (CAAB) is a non-profit organization whose mission is to empower low- and moderate-income residents of the Greater DC Area to take control of their finances, increase their savings, and build wealth for a better future.

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Now, more than ever, non-profits like Capital Area Asset Builders (CAAB) need your help. Please support CAAB as we continue to help DC residents manage and/or improve their financial situation during these difficult times. If you can't afford to give a monetary gift, please visit our Amazon Wish List where you can choose from a variety of items that CAAB needs in order to better serve our community.

or send a check or money order to
Capital Area Asset Builders (CAAB)
c/o Joseph Leitmann-Santa Cruz, Director of External Relations
1100 H Street NW, Suite 200
Washington, DC 20005