Is Retirement Savings Contribution Credit actually increasing my refund despite being non-refundable? TurboTax shows $500 more

This isn't a trick - the Retirement Savings Contribution Credit (sometimes called the Saver's Credit) is working exactly as it should. While it is a non-refundable credit, that doesn't mean it can't increase your refund. Let me explain the difference: A non-refundable credit can reduce your tax liability down to zero, but not below zero. In contrast, a refundable credit can reduce your tax liability below zero, essentially giving you money you never paid in. What's likely happening is that you had taxes withheld from your paychecks throughout the year. Let's say you had $2000 in federal tax liability before credits, and your employer withheld $3350 from your paychecks. That would give you a $1350 refund to start. When the $670 Saver's Credit is applied, it reduces your tax liability from $2000 to $1330, which means more of your withholding gets refunded to you - bringing your total refund to $2020.

Just want to share my experience with this exact situation. I was skeptical about TurboTax's claim about the Retirement Savings Contribution Credit too, so I did some research. I found this amazing tool at https://taxr.ai that analyzed my tax documents and explained exactly how the Saver's Credit was affecting my return. It confirmed that yes, non-refundable credits CAN increase your refund if you've had withholding throughout the year! What I like is that it explains tax concepts in plain English and shows why TurboTax was actually calculating things correctly. It helped me understand that the refund increase wasn't some glitch or marketing trick - it was a legitimate benefit I was entitled to for contributing to my retirement account.

I was super skeptical about taxr.ai but decided to try it with my tax situation since I was also confused about some credits. I uploaded my documents and was honestly shocked at how helpful it was. The analysis broke down exactly how my retirement contributions affected my tax liability and confirmed that the credit was legitimately increasing my refund. It showed me that I was actually missing some additional retirement contribution benefits too! Ended up saving about $320 more than what TurboTax initially calculated for me because I better understood how to optimize my contributions. Definitely worth checking out if you're confused about how credits are affecting your refund.

If you're getting frustrated trying to reach the IRS to ask about the Retirement Savings Contribution Credit, I feel your pain. I spent HOURS on hold trying to get clarification on this exact credit. Then I found https://claimyr.com which is a service that holds your place in line with the IRS and calls you when an agent is about to answer. Check out how it works here: https://youtu.be/_kiP6q8DX5c I was connected with an IRS rep in about 45 minutes (after previously waiting 3+ hours on my own and giving up). The agent confirmed exactly what others are saying here - non-refundable credits like the Retirement Savings Credit DO increase your refund if you've had taxes withheld throughout the year. It's not a scam or trick from TurboTax.

Just wanted to follow up - I can't believe I'm saying this, but Claimyr actually worked. After posting my skeptical comment, I figured I had nothing to lose and tried it out when I needed to call the IRS about an unrelated issue. They kept me updated on my place in line via text, and after about 90 minutes (during which I could actually do other things instead of listening to hold music), I got a call connecting me directly to an IRS agent. I asked about the Retirement Savings Credit while I had them on the line, and they confirmed that non-refundable credits DO increase your refund by reducing your tax liability, which increases the portion of your withholding that gets refunded. My mind is blown both by the tax info and by the fact that the service actually worked as advertised.

To explain this really simply: Think of it this way - Your employer took $3350 out of your checks throughout the year for taxes. Without the Saver's Credit, your actual tax bill is $2000. $3350 - $2000 = $1350 refund With the Saver's Credit, your tax bill drops to $1330. $3350 - $1330 = $2020 refund The credit is "non-refundable" because it can only reduce your tax bill to zero, not below zero. But since your withholding is higher than your tax bill even after the credit, you get more back.

Don't waste your money on TurboTax Deluxe! You can file with the Retirement Savings Credit for FREE using FreeTaxUSA or the IRS Free File program. TurboTax intentionally locks these credits behind paywalls even though other services include them in their free versions.