Home > 2016 > Personal Finance

Are You Missing Out on This Tax Break?

Advertiser Disclosure Comments 0 Comments

Are you or someone you know overlooking one of Uncle Sam’s most generous tax breaks? The Saver’s Credit allows low- to moderate-income workers who are saving for retirement to reduce their federal tax bill by as much as $1,000 ($2,000 for married couples filing jointly). But just 25% of workers with annual household incomes of less than $50,000 are aware of the credit, according to a new Transamerica Retirement Survey.

“Unfortunately, many eligible workers may be missing out on the Saver’s Credit simply because they don’t know that it exists,” Catherine Collinson, president of the nonprofit Transamerica Center for Retirement Studies said in a news release on the survey.

The Saver’s Credit — also called the Retirement Savings Contribution Credit — may be applied to the first $2,000 in voluntary contributions an eligible worker makes to an IRA or an employer-sponsored retirement plan such as a 401(k) or 403(b). It’s easy to see why taxpayers might miss this credit. Because contributions in employer-sponsored retirement plans and IRAs grow tax free, workers often confuse the two benefits or figure the government wouldn’t offer two tax benefits for the same savings. But the credit is an important incentive for these workers to save for retirement, according to Collinson.

Here’s who’s eligible for the Saver’s Credit for the 2015 tax year.

  • Single filers with adjusted gross income (AGI) of up to $30,500
  • Head of households with AGI up to $45,750
  • Married couples filing a joint return with AGI up to $61,000

Eligible taxpayers must file a 1040, 1040A or 1040NR. The credit is not allowed on the 1040EZ.

However, whether or not you are eligible for the Saver’s Credit, contributing to your employer-sponsored retirement account or a traditional IRA can be one of the best ways to maximize your tax refund. The reason? Your contributions are made with pre-tax dollars, which helps lower your taxable income – and build savings for the future. Knowing the basics of common tax exemptions and deductions can also help. You can find more information on the Saver’s Credit on the Transamerica Center for Retirement Studies website or on www.IRS.gov.

Remember, filing your taxes early can minimize the odds of falling victim to taxpayer identity theft. And, if you are a victim of tax refund fraud and believe your Social Security number was compromised, you should keep an eye on your credit for signs of other types of identity theft. You can do so by pulling your credit reports for free each year at AnnualCreditReport.com and viewing your credit scores for free each month on Credit.com.

More Money-Saving Reads:

Image: Wavebreakmedia Ltd

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team