There’s Still Time to Earn a $2,000 Saver’s Credit for 2021 Roth IRA Contributions | Smart Change: Personal Finance


(Charlene Rhinehart, CPA)

If you didn’t get a chance to contribute to your Roth IRA (individual retirement account) in 2021, don’t sweat it. There’s still time to stash money away in your IRA for 2021. You may even qualify for the Saver’s Credit, which can grant you access to a nonrefundable credit of up to $2,000.

We’ll dive into the Roth IRA and Saver’s Credit so you can determine if you can scoop up more tax benefits before the tax filing deadline.

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2021 contribution countdown

Roth IRA savers have until the tax filing deadline to make contributions for 2021. That deadline is April 18, 2022, for most taxpayers. After the deadline passes, you forfeit your chances of making contributions to your Roth IRA for 2021.

If you’re on the fence about contributing to a Roth IRA, consider these benefits. You can:

  • Pay your tax bill up front in exchange for tax-free income during retirement.
  • Leave the money in your account for as long as you want because there are no required minimum distributions.
  • Withdraw the money you contributed at any time without worrying about taxes and penalties.
  • Gain access to your account before retirement to pay for college expenses or buy a home.

The Roth IRA is bursting with benefits that you can use now or during retirement. Before you contribute, make sure you have earned income for the year. Also, double-check your modified adjusted gross income (MAGI) to ensure you don’t make too much money to make direct contributions to a Roth IRA.

Earn a Saver’s Credit

If you’re still not convinced that contributing to a Roth IRA is worth your time, a Saver’s Credit may make you change your mind.

The IRS rewards qualified low-and-moderate income savers with a Saver’s Credit. Formerly known as the Retirement Savings Contributions Credit, this tax benefit can grant you a credit worth up to $1,000 if you’re single ($2,000 married filing jointly). The credit is nonrefundable, so it can only reduce your tax bill to zero, not leave you with a tax refund.

Let’s say you are filing a joint return with your spouse, and your total tax bill is $1,500. If you qualify for a $2,000 Saver’s Credit, your tax tab instantly falls to zero. You can’t keep the remaining $500, but you’ll walk away with your tax bill paid in full.

Calculate your potential credit

Everyone will not qualify for the maximum Saver’s Credit. It all depends on your filing status and adjusted gross income for the year.

Let’s say you are filing a joint return and qualify for the 50% credit. If you and your spouse contribute $4,000 to a Roth IRA, you would qualify for a credit worth $2,000 (50% of $4,000). If you contribute $6,000 to a Roth IRA, you would still qualify for a credit worth $2,000. That’s the maximum credit that someone filing a joint return with their spouse can claim.

This table shows the 2021 Saver’s Credit rate and AGI eligibility by filing status. There are three credit buckets that you can fall in: 50%, 20%, or 10%.

2021 Saver’s Credit rate and AGI eligibility by filing status


Married Filing Jointly


Head of Household


All Other Filers


50% of your contribution

$0 to $39,500

$0 to $29,625

$0 to $19,750

20% of your contribution

$39,501 to $43,000

$29,626 to $32,250

$19,751 to $21,500

10% of your contribution

$43,001 to $66,000

$32,251 to $49,500

$21,501 to $33,000

not available

Over $66,000

Over $49,500

Over $33,000

Act now before your time expires

Contributing to a Roth IRA can lead to huge wins during retirement. It can also grant you access to a lesser-known tax perk — the Saver’s Credit — which can wipe away your current year’s tax bill. If you think you will owe taxes, you should consider socking away money in a Roth IRA instead of giving money directly to the IRS.

Your window of opportunity to contribute to a 2021 Roth IRA is shrinking. Do your research, and make a decision fast. If you have a bonus coming your way, you can throw that money into a Roth IRA. Even if you’re not thinking about retirement now, your Roth IRA contributions can grant you a savings pass that can erase some or all of your 2021 tax worries.

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