Believe it or not, the government will pay you to save.
Seriously. Check this out.
It’s called the Saver’s Credit, and it’s a valuable — but often overlooked — way to save money on your taxes.
Saver’s Credits totaling more than $1.7 billion were claimed on about 9.4 million tax returns in tax year 2020, according to the Internal Revenue Service. That’s an average credit of about $186 per return.
Keep reading to learn who is eligible for the Saver’s Credit and how it works.
What Is the Saver’s Credit?
The Saver’s Credit is a way to put money back in your pocket when you save for retirement.
If you’re a low- or middle-income worker, you can claim the Saver’s Credit — also known as the retirement savings contributions credit — by adding money to a 401(k) or individual retirement account (IRA).
You may also be eligible for the credit for contributions to an Achieving a Better Life Experience (ABLE) account, if you’re the designated beneficiary.
The Saver’s Credit is worth up to $1,000 for single filers, or $2,000 for married couples filing jointly.
Depending on your adjusted gross income and tax filing status, you can claim the credit for 50%, 20% or 10% of the first $2,000 you contribute to a retirement account within a tax year.
Not only do a lot of people forget about this credit, many low-income workers miss out on the sweet tax benefits of saving for retirement because they worry doing so will
