Medical residents are always looking for ways to save taxes. The Saver’s Credit is a way to save some money on taxes while getting a jumpstart on your retirement savings.

The Saver’s Credit (officially called the Retirement Savings Contributions Credit) was introduced as part of the Economic Growth and Tax Relief Reconciliation Act of 2001, at the beginning of the George W. Bush administration. It was part of a larger tax cut package, and it encourages low-income and middle-class individuals and families to save for retirement by providing tax breaks.

Who can qualify for the tax credit?

You must meet four criteria in order to qualify for the Saver’s Credit:

  1. You must be at least 18 years old. Unless you are Doogie Howser, M.D., you should be able to meet this criterion.
  2. You cannot be a full-time student for greater than five months of a calendar year. Unfortunately, this means that graduating 4th year medical students typically cannot get the Saver’s Credit in the year they are starting internship. However, for all subsequent years of residency, you will be able to claim this credit.
  3. You cannot be claimed as a dependent on another person’s tax return. This should not be an issue for most physicians.
  4. You cannot have an income greater than certain amounts. In general, single tax filers cannot have an income greater than $30,750 ($31,000 for 2017 tax year), and married filing jointly households cannot have an income greater than $61,500 ($62,000 for 2017 tax year). This means that only medical residents who have non-working spouses may be eligible for the credit.

How Much Is The Saver’s Credit Worth?

For most medical residents, their income qualifies them for a tax credit of 10% of their first $2,000 in retirement contributions. This translates to a tax credit of $200. You can double your tax credit by also contributing $2,000 under your spouse’s name. This can be done even if he or she does not have any earned income. You are allowed to contribute to your spouse’s retirement account with your earned income and be eligible for the Saver’s Credit.

So by contributing $2,000 to your retirement account and $2,000 to your spouse’s retirement account, you get a $400 tax credit. You also get the usual tax benefits of contributing to a retirement account.

What Retirement Contributions Qualify For The Saver’s Credit?

IRA, 401(k), and 403(b) contributions all qualify for the Saver’s Credit. You can contribute to either the traditional or Roth versions of these accounts and receive the Saver’s Credit.

I would recommend investing in a Roth retirement account over a traditional retirement account, for the reasons outlined in this article.

And if you use an IRA, you don’t even need to contribute to the retirement account in the year you will be claiming the Saver’s Credit. For example, to claim a Saver’s Credit in 2016, you can contribute to your traditional or Roth IRA as late as the tax filing deadline (April 18, 2017), and still claim the Saver’s Credit. Just be sure that when you are making the IRA contribution that you attribute it to 2016, not 2017.

How Do I Apply For The Saver’s Credit?

It should automatically be included in your tax return if you tell Turbotax or H&R Block that you contributed to a retirement account. For those who file their own taxes without tax software, you will need to fill out Form 8880: Credit for Qualified Retirement Savings Contributions.


Not many medical residents will be eligible for this credit, but it’s worth looking into if you are married with a stay-at-home spouse. It might be worthwhile to put money into your retirement account over paying down your student loans, since this will be one of your few opportunities to put significant money into a Roth account.

What do you think? Did you receive the Saver’s Credit when you were a resident?

Further reading: IRS webpage about the Saver’s Credit


    • Thanks, SRGO. There typically isn’t too much looking into since it is automatically given to you if you use tax software. I suppose it might encourage some residents to put money in a retirement account. This would be the precise intention of the tax credit.

  1. Great post on the Saver’s Credit, WSP!

    I did some research on this before but I never qualified as I could claimed on my parent’s tax returns.

    It’ll definitely be helpful for medical residents who meet the criteria want to save a bit for retirement and cut their taxes.

  2. Glad to see you spreading the word on the savers credit. Not many people know that it exists. I used to take that credit during my early career, when I wasn’t earning a very high income and my husband was working part-time. It was extremely helpful in offsetting the cost of some of our retirement contributions.

  3. I looked into this as well when I transitioned from medical school to internship and did not qualify. I contemplated writing about it but realized almost no resident would qualify given the ridiculously low income threshold. Would love to hear how many trainees actually qualified for the credit.


Please enter your comment!
Please enter your name here