213 | The Retirement Saver's Credit: Are You Eligible?

ChooseFI | Financial Independence Podcast

Jonathan Mendonsa & Brad Barrett | Choose FI Media, Inc

Business, Careers, Investing

4.8 • 5.2K Ratings

🗓️ 29 May 2020

⏱️ 42 minutes

🔗️ Recording | iTunes | RSS

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Summary

Most people miss thousands of dollars in tax savings every year because they don't know this credit exists. If your household income falls below certain thresholds, the IRS will match up to 50% of your retirement contributions—not as a deduction, but as a direct reduction in what you owe. Brad and Jonathan break down the Retirement Savers Credit, explaining exactly who qualifies, how it works, and why it's far more valuable than a typical deduction. Key Points: The Retirement Savers Credit offers up to 50% matching on contributions to retirement accounts, with maximum credits of $2,000 for married couples and $1,000 for singles. [00:11:01] Tax credits vs. tax deductions: A credit reduces your tax bill dollar-for-dollar, while a deduction only lowers taxable income—making credits significantly more valuable. [00:13:18] Income eligibility: Married filing jointly: AGI below $39,000 qualifies for the 50% credit Single filers: AGI below $19,500 qualifies for the 50% credit [00:15:30] Real-world example: A married couple with $39,000 AGI contributing $4,000 to retirement receives a $2,000 tax credit, potentially zeroing out their tax liability. [00:22:04] Timestamps: [00:01:02] Weekend Check-In [00:02:06] Barrett's Top 50 Recipes [00:11:01] Retirement Savers Credit Explained [00:13:10] Tax Credit vs. Tax Deduction [00:18:04] Practical Applications of Savers Credit [00:26:29] Community Feedback Key Quotes: "Tax credits directly reduce your tax liability dollar for dollar, making them incredibly valuable." [00:13:18] "The retirement savers credit is a powerful incentive for lower-income individuals to save for retirement." [00:18:04] Related Resources: IRS Retirement Savers Credit Information [00:12:32] ChooseFI Savers Credit Resource [00:11:30] Terminology: AGI (Adjusted Gross Income): Total income subject to tax after specific deductions [00:12:32] Savers Credit: Tax credit designed for lower-income individuals to encourage retirement savings [00:11:01] ▶ Listen Next: Ep. 216 — How to Make Financial Independence More Inclusive | Essential Listening

Transcript

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0:00.0	Alright guys, congratulations, you made it to the weekend. Funny how Friday sometimes feels like
0:04.6	Mondays in this COVID era, but we're going to hop into the mailbag. We're going to be discussing
0:08.5	the retirement savers credit today. This will not disappoint. Welcome to the ultimate crowd source,
0:14.2	personal financial. This is your Friday round. Your listening to Choose Appi Radio.
0:21.5	The blueprint for financial independence lives here.
0:30.2	If you're looking to unlock the secrets to financial independence and early retirement,
0:37.2	you're in the right place. Stay tuned and join a community of like-minded people who are getting
0:42.6	all fans to be here and taking control of their lives in the pursuit of financial independence.
0:48.2	Choose FI, your home for financial independence online.
1:00.5	Alright guys, excited to hop into this and help me with this. I have my co-host Brad here with me
1:06.6	today. How you doing, buddy? Hey, Jonathan, I am doing quite well. Yeah, it's hard to believe it is
1:11.5	the end of May already. Time has kind of been a bit of a vortex here, but yeah, end of May,
1:17.6	summer is on the horizon. It's pretty wild. Do you remember when you were optimistic for 2020?
1:21.8	Oh, you naive person, you. What do you have to show for 2020? COVID.
1:30.1	Yeah, it's hard to believe, hard to believe. But so Memorial Day, we just had past it. Do you have
1:37.2	any sense of normal seated? You guys grill out or do anything fun? We kind of did a social
1:41.6	distancing get together in our coldest sack. We're starting to slowly kind of loosen the
1:46.0	reins around the house a little bit and our neighbors and us just kind of like in the coldest sack
1:50.6	congregate. Just a little bit, keeping the right amount of distance, but we ended up,
1:54.5	there was some grilling out. There was lots of sparkling water. My son calls it cold water.
1:59.3	That's yeah, and oh, oh, Brad, Brad, we made one of the bear top 50 recipes.
2:04.0	Oh, do tell which one wasn't. So I bought the ingredients for two of them. So I went through the
	...

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