Saver’s Credit a Well-Kept Secret

Many individual taxpayers who could claim the Retirement Savings Contri­butions Credit don’t know to do so, ­ignorance the IRS could remedy by highlighting the incentive, said leaders of the Senate Finance Committee. Besides targeting advertising to the low- to modest-income filers the credit is intended to benefit, the IRS should refer to the credit in forms and instructions by its popular name, the Saver’s Credit, and make it available on Form 1040-EZ, said Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, the committee’s chairman and ranking minority member, in a July letter to then-acting IRS Commissioner Kevin Brown. The senators didn’t say how many taxpayers eligible for the Saver’s Credit aren’t claiming it but said they believe making it better known and easier to claim would expand its use. The graduated, nonrefundable credit can be as much as $1,000 per individual—including each spouse for joint filers. It is based on 50%, 20% or 10% of qualified contributions, depending on AGI, which phases out at $52,000 for joint filers. Introduced in 2001, the Saver’s Credit was made permanent by the Pension Protection Act of 2006.