20 Overlooked Tax Credits You Might Be Missing This Year
Maximize your tax refund by uncovering these 20 often-overlooked tax credits that could save you hundreds or even thousands of dollars.
- Chris Graciano
- 4 min read
Millions of individuals lose out on money every tax season only because they are unaware of all the tax credits that are available to them. There are several credits available to reduce your tax burden, ranging from caregiving and energy efficiency to education and home upgrades. This list highlights 20 commonly missed tax credits, helping you take full advantage of potential savings before filing your return.
1. Earned Income Tax Credit (EITC)
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Designed for low to moderate-income workers, this credit can be worth up to several thousand dollars, depending on income and family size. Many eligible taxpayers fail to claim it, mistakenly believing they don’t qualify.
2. Saver’s Credit
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If you contribute to a retirement account like a 401(k) or IRA, you might be eligible for this credit. It reduces your tax liability based on your contributions and income level.
3. Child and Dependent Care Credit
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This credit helps cover daycare or babysitting expenses for working parents. It applies to children under 13 or dependents who require care.
4. American Opportunity Tax Credit (AOTC)
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College students and their parents can benefit from this education credit. It covers tuition, books, and course-related expenses for the first four years of higher education.
5. Lifetime Learning Credit (LLC)
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Unlike the AOTC, this credit applies to any stage of education, including job training and professional development. You can claim up to $2,000 per tax return for tuition and fees.
6. Adoption Credit
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Adopting a child can be expensive, but this credit helps offset costs like legal fees, court expenses, and travel. You may be eligible for a credit of up to $15,000 per adoption.
7. Residential Energy Efficient Property Credit
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You could receive a substantial credit if you installed solar panels, wind turbines, or other renewable energy systems. This incentive helps homeowners save money while promoting clean energy.
8. Credit for Other Dependents (ODC)
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If you’re supporting an elderly parent or another non-child dependent, you could qualify. This credit offers up to $500 per dependent, helping with caregiving costs.
9. Health Coverage Tax Credit (HCTC)
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Some workers receiving Trade Adjustment Assistance or certain pension benefits can get help with health insurance costs. This credit covers a significant portion of your monthly premiums.
10. Electric Vehicle (EV) Tax Credit
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Buying an eligible electric car could earn you a tax credit of up to $7,500. The credit amount depends on the battery size and manufacturer eligibility.
11. Mortgage Interest Credit
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First-time homebuyers who received a Mortgage Credit Certificate (MCC) from their lender may qualify. This credit helps reduce the burden of mortgage interest payments.
12. Work Opportunity Tax Credit (WOTC)
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Businesses that hire individuals from certain target groups, such as veterans or long-term unemployed individuals, can claim this credit. It incentivizes companies to provide job opportunities to underrepresented workers.
13. Child Tax Credit (CTC)
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Families with qualifying children can receive up to $2,000 per child. A portion of this credit is refundable, meaning you can receive money back even if you don’t owe taxes.
14. Teacher Expenses Credit
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Educators who spend their own money on classroom supplies may qualify for this credit. It covers books, materials, and even professional development expenses.
15. Elderly or Disabled Credit
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This credit assists low-income seniors and individuals with permanent disabilities. Eligibility is based on income and filing status.
16. Recovery Rebate Credit
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If you missed out on previous stimulus payments, you may be able to claim this credit. It ensures eligible individuals receive the economic relief they were entitled to.
17. State-Specific Tax Credits
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Many states offer their own unique tax credits, such as renter’s credits or education savings incentives. These can supplement federal tax savings and vary widely by location.
18. Home Office Deduction (Self-Employed Only)
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Self-employed individuals who use part of their home exclusively for business can claim this deduction. It covers a portion of rent, utilities, and maintenance expenses.
19. Premium Tax Credit (PTC)
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If you purchased health insurance through the marketplace, you might qualify for this subsidy. The credit lowers monthly premium costs based on income and family size.
20. Student Loan Interest Deduction
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Borrowers repaying student loans may deduct up to $2,500 in interest payments. This deduction is especially useful for recent graduates managing loan debt.