Save for retirement and get a tax break too

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For all its pains, tax time is actually a great season to save for retirement.

Forget your workplace plan (if you have one) for now — you can only fund that through payroll deductions through the end of the calendar year. That deadline has passed. But if you have a traditional IRA, you can still stock it and get a tax break for 2016 taxes.

You have until Monday, April 17, to stash $5,500 in an IRA ($6,500 if you’re over 50).

It’s a great way to make up for any saving you didn’t do last year. Your future self will thank you. And your current self will thank you.

If you don’t have an IRA, you can still open one and get the tax break.

And if you have a 401(k) and you meet the income limit requirements, you can still soften the tax blow.

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Wait, there’s more

You may not realize it, but people who earn between $18,500 and $61,500 may be eligible for another tax break – and two of three people who are eligible don’t know about it.

It’s the saver’s credit, which can reduce the tax you owe or increase the amount of your refund.

Here’s how it works. The saver’s credit lets you offset the first $2,000 you save for retirement. That money could be through IRA contributions or a workplace plan, such as a 401(k) or a 403(b).

The maximum credit is $1,000 for single filers and $2,000 for married couples.

You can take the saver’s credit even if you are tax-deferring your retirement savings. It truly is a double benefit, and it may “sound too good to be true,” says Catherine Collinson, president of Transamerica Center for Retirement Studies. “Many eligible savers may actually be confusing the two incentives.”

Make sure to use the right form. You need to file using Form 1040, Form 1040A or Form 1040NR.

Check out the IRS page for all the facts and figures, and note that their worker example is named Jill. Woo-hoo! This Jill gets to deduct the amount of her IRA contribution from her income AND claim half of it ($500) for a 50 percent saver’s credit.

Don’t miss out on this double win. If your income falls inside these limits, it’s a win-win.

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Jill Cornfield

I'm a reporter at Bankrate, talking retirement – my own as well as yours. Sign up for my free newsletter.