Tax credit helps people saving save even more

WASHINGTON — Saving for retirement might seem like a luxury to Americans living paycheck to paycheck, but the government is trying to make it a bit easier.

The saver’s — or retirement savings contributions — credit is sometimes overlooked. Aimed at low- and moderate-income workers, the credit “helps offset part of the first $2,000 workers voluntarily contribute to IRAs and 401(k) plans and similar workplace retirement programs,” the Internal Revenue Service says.

The credit is on top of the allowable reduction in income on tax returns for contributions to qualified retirement plans.

“It’s one of the few times that the law lets you double dip,” said Barbara Weltman, a consultant and author of books on taxes, law and finance. “You get two benefits for the price of one.”

As with many other tax credits or deductions, the saver’s credit phases out as incomes become higher. For single taxpayers, the credit phases out at $30,500, at $61,000 for married couples filing jointly, and at $45,750 for heads of households.

In addition to the income requirements, a person has to be at least 18. Taxpayers who were full-time students in 2015 or could be claimed as a dependent on another person’s tax return are not eligible.

To claim the credit, fill out Form 8880.

“Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the tax owed,” the IRS says. It cautioned, though, that the credit often is less than the maximum $1,000 for single filers or $2,000 for married couples filing jointly because of other deductions and credits claimed.

Kathy Pickering, executive director of the Tax Institute at H&R Block, said the company is working to determine what it would take to get people to save.

“While oftentimes low-income people do understand and want to save for retirement, their economic situation makes it very difficult,” she said.