You may be able to cut down your tax bill with a little-known credit if you saved for retirement this year

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December 1, 2018 3:31 PM

The Saver's Credit enables low- to moderate-income taxpayers saving for retirement to reduce their tax bill by up to $2,000.

The Saver's Credit gives eligible taxpayers saving for retirement a tax break.

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$63,000 as a joint filer.

If you saved money in a retirement account in 2018, you may be eligible for a tax break called the Saver's Credit.

The Saver's Credit enables low- to moderate-income taxpayers saving for retirement to reduce or eliminate their tax bill by up to $1,000, or $2,000 if married and filing jointly.

Only 12% of American workers with an annual household income of less than $50,000 know about the Saver's Credit, according to Turbo Tax.

Tax credits, like tax deductions, can help you pay less income tax, according to the IRS. Tax credits, however, are subtracted directly from the amount you owe in taxes on a dollar-for-dollar basis, while tax deductions are subtracted as a percentage from your gross income.

To be eligible for the Saver's Credit, you must meet three requirements: You're at least 18 years old, not a full-time student, and aren't claimed as a dependent on someone else's return. Your adjusted gross income (AGI) also must be less than $31,500 if you're a single filer, and less than

Depending on your income, you can claim a credit that's equal to

Note that rollover contributions and employer contributions aren't eligible, and any recent distributions from your ABLE account, IRA, or retirement plan may lessen your eligible contributions.

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