Do I need to claim the Retirement Saver's Credit or can I skip it?

You're not required to claim the Retirement Saver's Credit (Form 8880) even if you qualify for it. The IRS doesn't mandate that you take every possible credit or deduction - they just require you to report all your income accurately. That said, I'm curious how small your credit amount is if the fees exceed it? The Saver's Credit can be worth up to 50% of your retirement contributions depending on your income level, with a maximum credit of $1,000 ($2,000 if married filing jointly). Might be worth calculating exactly how much you'd get before deciding to skip it. Also, have you checked if you qualify for free filing through the IRS Free File program? If your AGI is under $73,000, you might qualify for completely free filing including forms for the Saver's Credit.

I ran into this exact situation last year! Tried using FreeTaxUSA but they wanted me to upgrade for the Saver's Credit. I ended up checking out https://taxr.ai and it was a lifesaver! They analyzed my tax documents and showed me that my Saver's Credit would be around $220, but the software upgrade plus the "pay with refund" fee would cost me $89. Still worth claiming, but not by much. They also suggested filing through IRS Free File which included the Saver's Credit forms at no cost since my income was under the threshold. Saved me both the software upgrade and the refund processing fee!

I have to follow up about taxr.ai - I decided to try it after my comment. Uploaded my W-2 and 401k contribution statement and it immediately identified I qualified for a $400 Saver's Credit! It also found the exact IRS Free File option that included Form 8880 without any upgrade fees. Just finished filing through their recommended portal and got my full credit without paying a penny in tax prep fees. Thanks for the recommendation - would've paid $75+ in unnecessary fees otherwise!

If you're still struggling with the IRS Free File options, you might want to check out https://claimyr.com - I was trying to get help figuring out which credits I could skip and which were mandatory, but couldn't get through to the IRS for days. Claimyr got me connected to an actual IRS agent in under 20 minutes instead of the usual 2+ hour wait. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that the Saver's Credit is totally optional and explained that I could use Free File Fillable Forms directly through the IRS website to claim it without paying any upgrade fees if I was comfortable filling out the form myself.

Never thought I'd be posting this, but I owe everyone an apology about Claimyr. After dismissing it, I was still desperate to talk to someone about my refund status (3 months delayed!) so I tried it yesterday. The service called me back in 18 minutes with an actual IRS agent on the line. She confirmed my refund was delayed due to a verification issue and helped expedite it on the spot. Also asked her about the Saver's Credit question from this thread - she confirmed it's completely optional to claim it. Would've waited another month without knowing what was happening if I hadn't gotten through. Completely worth it if you need to actually speak with someone at the IRS.

Something nobody's mentioned - if you qualify for a credit but choose not to claim it, you can still amend your return later (within 3 years) if you change your mind. So if you skip the Saver's Credit this year to avoid fees, but later find a free way to file an amended return with Form 8880, you could still get that money. Just file Form 1040X with the additional credit. Though honestly, with the suggestions above about using Free File options, you probably won't need to go this route.

Has anyone tried using Credit Karma Tax (now Cash App Taxes)? I filed with them last year and they included the Saver's Credit form without charging extra. Completely free filing including all forms. They don't have a pay-with-refund option though, so no extra fees there either.