Saved a Little for Retirement? The IRS May Give You Money Back

There may be money waiting for saving what you already saved

Here is some good news. If you put money into a retirement account like a 401(k) at work or an IRA on your own, the IRS may give you a tax credit for it.

It is called the Saver's Credit. It is meant for people with low and moderate incomes. In other words, it is built for regular working folks, not the wealthy.

This is money you may already be owed. And checking on it is completely free through the IRS.

A credit is better than a deduction

The Saver's Credit is a credit, not a deduction. That difference matters.

A deduction lowers the income you get taxed on. A credit lowers the tax you owe, dollar for dollar. So a credit can put more back in your pocket.

If you already owe less because of the credit, that can mean a smaller tax bill or a bigger refund when you file.

Who can qualify

The Saver's Credit is for people whose income falls under the yearly limits set by the IRS. Those limits depend on how you file, such as single, married filing jointly, or head of household.

You also need to contribute to an eligible retirement account. That includes many 401(k) plans, traditional and Roth IRAs, and some other workplace plans.

Full time students and people claimed as a dependent on someone else's return generally do not qualify. The exact income limits and rules are listed on the IRS page, so check there for the current year before you file.

How to get it

You claim the Saver's Credit when you file your federal tax return. There is a specific IRS form for it, and tax software or a free tax preparer can walk you through it.

You do not need to pay anyone to claim this. The IRS path is free. Free tax help is also available through IRS programs for people who qualify.

September is a good time to plan. If you are making estimated tax payments or thinking ahead to next filing season, adding to a retirement account now could set you up for this credit later.

Frequently asked questions

Do I need a lot of money to get the Saver's Credit?

No. It is designed for people with low and moderate incomes. You need to fall under the IRS income limits and have contributed to an eligible retirement account. Check the IRS page for the current limits.

What kinds of accounts count?

Many retirement accounts qualify, including 401(k) plans, traditional IRAs, and Roth IRAs. The IRS lists all eligible plans on its Saver's Credit page.

How do I claim it?

You claim it on your federal tax return using the IRS form for retirement savings contributions. Free tax software or a free tax preparer can help you do it.

Does it cost anything to claim?

No. Claiming the Saver's Credit through the IRS is free. You never need to pay a service to get it.