Many Americans don’t realize they could qualify for thousands of dollars in tax credits when filing their taxes. Tax credits directly reduce the amount of tax you owe — or increase your refund — making them far more valuable than deductions.
Depending on your income, family situation, and eligibility, you could qualify for tax credits worth $1,200, $3,200, or even $3,915. Let’s break down the major credits, how much they’re worth, and how to find out if you qualify.
What Are Tax Credits and How Do They Work?
Tax credits are amounts the government allows you to subtract directly from the taxes you owe. For example, if you owe $4,000 in taxes but qualify for a $1,200 tax credit, your tax bill drops to $2,800. Some credits are even refundable, meaning if the credit reduces your tax bill to below zero, the IRS will send you the remaining amount as a refund.
Many credits are designed to help low- and middle-income families, parents, students, and workers keep more of their money or get a larger refund. But millions miss out each year simply because they don’t know they qualify.
$1,200 Credit: The Saver’s Credit
The Saver’s Credit, also called the Retirement Savings Contributions Credit, offers up to $1,200 for eligible individuals ($2,400 for married couples).
Who qualifies?
- You must contribute to a retirement account, like a 401(k), IRA, or Roth IRA.
- You must meet income limits: under $36,500 for single filers, under $73,000 for married filing jointly (2024 limits).
- You must be at least 18, not a student, and not claimed as a dependent.
The credit rate ranges from 10% to 50% of your contributions, depending on your income. For example, if you put $2,400 into your IRA and qualify for the 50% rate, you get a $1,200 credit.
$3,200 Credit: The American Opportunity Tax Credit (AOTC)
The AOTC helps students and families pay for college expenses. You can claim up to $2,500 per eligible student for tuition, books, and fees, and if you didn’t owe enough taxes, up to $1,000 of it is refundable.
For families with two eligible college students, this can add up to $3,200 or more in credits.
Who qualifies?
- The student must be pursuing a degree or recognized credential.
- You can claim the credit for the first four years of post-secondary education.
- Your modified adjusted gross income (MAGI) must be under $90,000 (single) or $180,000 (married filing jointly) for the full credit.
Be sure to keep good records of your tuition payments and receipts for textbooks, as the IRS may ask for proof.
$3,915 Credit: The Earned Income Tax Credit (EITC)
The EITC is one of the most powerful tax credits for working individuals and families with low-to-moderate income. For tax year 2024, the average EITC amount is about $3,915, but it can go as high as $7,830 depending on family size and income.
Who qualifies?
- You must have earned income from work or self-employment.
- You must meet income limits, which vary by family size. For example, a single parent with two kids can qualify with income up to $55,529.
- You must have a valid Social Security number and file a tax return, even if you’re not otherwise required to file.
Many filers leave the EITC unclaimed every year because they think they’re not eligible — even though millions of families and individuals qualify.
How to Check If You Qualify
The IRS provides helpful tools like the Interactive Tax Assistant and the EITC Assistant on its website. These tools allow you to plug in your income, family situation, and other details to check eligibility before filing.
It’s also smart to use reputable tax software, a qualified tax preparer, or a community tax assistance program (like VITA) to make sure you’re not missing credits you deserve. Even if you don’t owe taxes, you should file a return if you qualify for refundable credits — they can result in a valuable refund check.
Important Filing Tips
Keep documentation. Save receipts for tuition, retirement contributions, and proof of income.
File on time. The IRS filing deadline is usually April 15 (or October 15 if you request an extension).
Amend past returns. If you missed credits in past years, you can file an amended return for up to three previous years and claim the money you’re owed.
Final Thoughts: Don’t Leave Money on the Table
With potential tax credits ranging from $1,200 to $3,915 (and sometimes more), it’s critical to check your eligibility and claim everything you qualify for. Whether you’re saving for retirement, paying for college, or supporting a family on earned income, these credits can dramatically reduce your tax burden or boost your refund.
Don’t assume you make too much or that you don’t qualify — run the numbers carefully or get help from a tax professional. In tough economic times, every dollar counts, and these credits can provide much-needed financial relief.