Update: The 2022 Retirement Saver’s Credit income limits have been announced. Remember, these are the Savers Credit limits for your income in 2022, for the taxes you will file in early 2023. You will still use the numbers below for the income taxes you file in early 2022. The 2022 Retirement Savings Contribution Credit income limits for married filing jointly will be $68,000, up from $66,000. For single fillers, $34,000, up from $33,000.
The Retirement Saver’s tax credit is a huge bonus for taxpayers who qualify. If you qualify for the Retirement Savings Contributions Credit, or Savers’ Credit, you can get a tax credit of $1,000 on your 2021 income taxes. The maximum Retirement Saver’s tax credit for 2021 is 50% of the contributions you make to a retirement plan like a 401k, or an individual retirement plan like a Roth IRA or traditional IRA, up to $2,000 for a maximum tax credit of $1,000.
Retirement Saver’s Credit Qualify
The Saver’s Credit is designed to encourage lower-income Americans to save for retirement. To qualify for the Saver’s Credit you must be 18 years or older, not claimed as a dependent on anyone else’s tax return, and not a student. In addition, your Adjusted Gross Income (AGI) must be below a certain threshold. Remember, your Adjust Gross Income is not the same as your total income, nor the same as your taxable income. It’s an interim value calculated on Line 11 of Form 1040.
2021 Saver’s Credit Income Limits Married Filing Jointly
50% of your contribution: AGI $39,500 or less
20% of your contribution: AGI $39,501 to $43,000
10% of your contribution: AGI $43,001 to $66,000
2021 Savers Credit Income Limits Single
50% of your contribution: $19,700 or less
20% of your contribution: $19,751 to $21,500
10% of your contribution: $21,501 to $33,000
If your AGI is over $66,000 married, or $33,000 single, you do not qualify for the Retirement Saver’s Tax Credit.
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What Counts as a Student?
For purposes of the Saver’s Credit, a student is someone who was enrolled full-time in school for ANY PART of five calendar months. So, if you were enrolled from August 31 to May 1, both August and May count as months you were enrolled. In this case that would be 10 months enrolled (Aug, Sep, Oct, Nov, Dec, Jan, Feb, Mar, Apr, May). If you were a part-time student, then you do qualify for the credit.
How Do I Claim the Saver’s Credit?
To claim the Saver’s Tax Credit you will need to file Form 8880, Credit for Qualified Retirement Savings Contributions. The Amount you calculate goes on Schedule 3 of your Form 1040.
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About the Author
By Brian Nelson – Brian is a former Certified Financial Planner and financial advisor. He writes for the Finance Gourmet and other financial publications. The material provided on this website is for informational use only and is not intended for financial or tax advice. ArcticLlama, LLC, FinanceGourmet.com, and Brian Nelson, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own tax professional when making decisions regarding your tax situation.
