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 during the year to a retirement account. Therefore, the maximum credit amounts that can be claimed are $1,000, $400 or $200.
- The biggest credit amount a married couple filing jointly can claim together is $2,000.
- But, if you and/or your spouse took a taxable distribution from your retirement account during the two years prior to the due date for filing your return (including extensions), that distribution reduces the size of the Savers Credit available to you.
- The Savers Credit is a 'non-refundable' tax credit. That means this credit can reduce the tax you owe to zero, but it can't provide you with a tax refund.
To claim a Savers Credit, you must:
- Be age 18 or older.
- Not be a full-time student.
- Not be claimed as a dependent on someone else's tax return.
- Have made your retirement contribution during the tax year for which you are filing your return.
- Meet the income requirements.
In 2020, the maximum adjusted gross income for Savers Credit eligibility is:
- $65,000 for a married couple filing jointly,
- $48,750 for a head of household, and
- $32,500 for all other taxpayers.
The maximum credit you can claim phases out as your income increases. To see the calculations, view Form 8880 "Credit for Qualified Retirement Savings Contributions." @Tucker14
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