Tax credits are the best way to keep more of your money come April 15 because — unlike deductions, which only reduce your taxable income — they lower your bill on a dollar-for-dollar basis. Even better, you get cash back from the credits that are refundable or partially refundable once your tax bill falls to zero.
However, some of the best tax credits are easy to miss.
Some people mistakenly assume you have to itemize to claim all of them. Others leave money on the table over confusion about phaseouts. In other cases, your tax software might not alert you to an available credit unless prompted.
If you’ve paid taxes in the past, you probably know about popular breaks like the child tax credit and earned income tax credit, but don’t overlook these valuable, but lesser-known credits, which you might not know you can claim.
Credit for the Elderly or the Disabled
Worth between $3,750 and $7,500, the credit for the elderly or the disabled is a potentially very helpful, but often underutilized, tax break.
It’s available to eligible disabled filers who meet certain qualifying criteria, but simply being age 65 or older — that’s one in six Americans, as of the 2020 Census — can be enough to cash in.
Use the Internal Revenue Service’s (IRS’s) interactive tool to determine if you qualify for this often forfeited, four-figure credit.
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Saver’s Credit
If you’re contributing to a qualified retirement fund without claiming the saver’s credit, then you’re passing up one of the biggest advantages of your tax-advantaged account.
Officially called the retirement savings contributions credit, it gives a boost to low- and moderate-income workers who save using Roth individual retirement accounts (IRAs), employer-based plans such as 401(k)s and a host of other common tax-privileged accounts.
The nonrefundable credit equals 10%, 20% or 50% of your contributions, depending on your income, which cannot exceed:
- 2025: $39,500 for single filers, $59,250 for heads of household and $79,000 for married couples filing jointly
- 2026: $40,250 for single filers, $60,375 for heads of household and $80,500 for married couples filing jointly
Child and Dependent Care Credit
The cost of caregiving is immense, which is why it’s especially important for anyone who qualifies to claim the child and dependent care credit.
You might qualify if you’re responsible for an eligible dependent who is a qualifying:
- Child under 13
- Spouse
- Individual of any age who you live with for more than half the year
The credit is worth up to $3,000 for one qualified dependent or $6,000 for two or more.
Lifetime Learning Credit (LLC) and American Opportunity Tax Credit (AOTC)
You might qualify for the LLC or AOTC if you paid for educational expenses for you, your spouse, a dependent or a qualified third party. They have similar eligibility standards, but you can’t claim both credits for the same expenses, so visit the IRS’s education credit comparison page to determine which one is right for you.
The relatively high income thresholds include the vast majority of taxpayers — and you don’t have to be in college to qualify. They’re available to many adults pursuing professional certifications or training in new job skills, whether or not they realize they’re eligible.
The credits can be worth up to $2,500, and the AOTC is partially refundable.
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This article originally appeared on GOBankingRates.com: Here Are 5 Tax Credits You Didn’t Know You Qualified For
