Don't File Your Taxes Until You Review These Tax Credits to Boost Your Refund

If even if you don't itemize deductions, you can still get a bigger tax refund by taking advantage of tax credits.

Peter Butler Senior Editor
Peter is a writer and editor for the CNET How-To team. He has been covering technology, software, finance, sports and video games since working for @Home Network and Excite in the 1990s. Peter managed reviews and listings for Download.com during the 2000s, and is passionate about software and no-nonsense advice for creators, consumers and investors.
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Peter Butler
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Families with children and lower-income taxpayers have several big tax credits that shouldn't be missed.

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You've got less than two weeks left to file your 2023 tax return -- the income tax deadline for US taxpayers is once again April 15 this year (at least for most US taxpayers). While it's tempting at this late date to blast through your tax return as fast as possible to get it finally finished, be sure to take time to review all of the potential tax credits you might receive to give yourself a bigger tax refund.

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Tax credits directly reduce the federal income taxes that you owe, and they can be awarded to families with children, students with educational expenses, people with medical expenses or investors who put money in special tax-advantaged accounts.

Read more: CNET's Best Tax Software for 2024

Learn about all the potential tax credits this year to maximize your tax refund. For more tax tips, see all the tax breaks for homeowners and find out the rules for paying taxes on Social Security benefits.

How do income tax credits work?

Tax credits directly subtract money from the federal income taxes that you owe, meaning each dollar in tax credits you receive is a dollar that you save in taxes. Tax deductions, on the other hand, reduce your amount of taxable income, which lowers your tax bill indirectly.

For example, a single tax filer who earned $80,000 in 2023 with $13,000 in deductions -- or $67,000 taxable income -- will pay about $10,000 in federal income taxes. A $1,000 tax credit would reduce their total tax bill to $9,000. A $1,000 tax deduction would lower their taxable income from $67,000 to $66,000 -- at the expected tax rate of 22%, that deduction would result in $220 of tax savings, reducing the total tax bill to $9,780.

Important: You don't need to itemize deductions to claim tax credits.

Tax credits are classified as either nonrefundable, fully refundable or partially refundable.

Nonrefundable tax credits can only be used against taxes that you owe -- once your tax bill hits $0, you don't get the additional money. Fully refundable tax credits are just the opposite -- if your refundable tax credits are more than the income taxes that you owe, you will receive the extra amount back in a tax refund. 

Partially refundable credits let you claim a portion of extra money. For example, up to 40% (or $1,000) of the maximum $2,500 for the American Opportunity Tax Credit can be put toward your tax refund if your tax liability hits $0.

Note: The best tax software will determine your eligibility for tax credits using a question-and-answer interview process and automatically add your info to your electronic return, but we've also provided links to IRS forms for each tax credit for those filing on paper or those wishing to learn more. Federal tax credits are recorded on Form 1040 Schedule 3 -- most also require a specific separate form, worksheet or schedule.

a screenshot of IRS Schedule 3 for 2023 showing a list of nonrefundable tax credits
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a screenshot of IRS Schedule 3 for 2023 showing a list of nonrefundable tax credits

Most tax credits are nonrefundable.

IRS/Screenshot by Peter Butler/CNET

Also note that these tax credits listed below are those designed for average American taxpayers. There are additional tax credits for business or rental-property owners that are not covered here.

Tax credits for parents and families in 2024

Some of the biggest benefits in the federal tax code are designed for parents of young kids. All parents who meet income limits receive the child tax credit, while families can also get money back for child care, adult dependents or costs related to adoptions.

Child tax credit: This credit for families with young children provides $2,000 for each dependent child with a Social Security number who was younger than 17 at the end of 2023. The $2,000 per child amount begins to phase out at incomes of $200,000 for single tax filers and $400,000 for married couples filing jointly.

Eric Bronnenkant, head of tax at Betterment, told CNET that the child tax credit is one of the most valuable for taxpayers. He notes that, "the credit is available per qualifying child, so parents of four children could receive $8,000." After several years during the pandemic where the credit was fully refundable, the child tax credit is nonrefundable again, but the additional child tax credit currently (see below) allows you to get up to $1,500 back for each if your credits outweigh your tax liability.

The US Congress is considering changes to the child tax credit that would increase the amount available in the additional child tax credit and peg the overall credit to the cost of living, meaning that the amount of the credit would increase each of the next three years based on the annual rate of inflation. These child tax credit changes could take effect for 2023 -- but the legislation is currently stuck in the US Senate.

You can claim the child tax credit this year by listing your eligible dependents and their Social Security numbers on your Form 1040 and completing Schedule 8812, "Credits for Qualifying Children and Other Dependents."

Credit for other dependents: If you have children or other dependents who were 17 or older at the end of 2023, you can get a $500 credit for each of them. This information should also be included in Schedule 8812, on lines 6 to 8. The credit starts to phase out at $200,000 of income for single filers or $400,000 for married filing jointly.

Additional child tax credit: Although the IRS puts this "credit" on a separate page of Form 8812, it works like a partial refund for any child tax credit money that goes beyond your tax burden. If you are eligible for the $2,000-per-child tax credit but your tax liability is already $0, you can receive up to $1,500 for each eligible child as part of a tax refund.

The additional child tax credit can be calculated by completing the worksheet on page 2 of Schedule 8812. 

Adoption credit: If you adopted a child or started the adoption process in 2023, you can get up to $15,950 back for eligible expenses, including travel costs and court fees. The credit starts to phase out for taxpayers with modified adjusted gross income (MAGI) of $239,230 and is completely eliminated at $279,230.

The adoption credit is claimed by filing Form 8839, "Qualified Adoption Expenses."

Child and dependent care credit: This tax credit provides money back for expenses related to care for qualifying dependents younger than 13 years old or dependents who are physically or mentally disabled.

Frink family with newborn and piggy bank, house, car and calculator graphics

Though smaller than last year, the child tax credit is still $2,000 per child.

Frink family/Design by Robert Rodriguez/CNET

Depending on your income, it provides 20 to 35% of your money back on $3,000 in expenses for one qualifying dependent or $6,000 for two or more. Once your adjusted gross income tops $43,000, your credit is limited to 20% of expenses.

The child and dependent care credit was expanded in 2021 to provide up to 50% back on expenses up to $8,000 for one child or $16,000 for multiple children, and it was also fully refundable, but those pandemic-related provisions that expanded the child care credit expired at the end of 2021, and the credit is now nonrefundable.

To claim the child and dependent care credit on your 2023 tax return, you'll add your dependents and their Social Security numbers to your 1040 form and complete IRS Form 2441, "Child and Dependent Care Expenses."

Earned Income Tax Credit: While the EITC isn't limited to families, taxpayers with children reap the biggest rewards. Designed for low- to moderate-income taxpayers, the EITC ranges from $600 to a maximum of $6,935.

For the tax year 2023, here are the tax credits and income limits for the EITC:

Earned Income Tax Credit payouts

Number of children EITC amountIncome limit for single, head of household or widowed filersIncome limit for married filing jointly
0 $600$17,640$24,210
1 $3,995$46,560$53,120
2 $6,604$52,918$59,478
3 $7,430$56,838$63,398

Source: Earned Income and Earned Income Tax Credit (EITC) Tables on IRS.gov

Additionally, to claim the EITC, you cannot have more than $11,000 of investment income. Eligible EITC recipients with no children can claim the credit on their 1040 form. Taxpayers with children will need to file Schedule EITC in order to claim their full credit.

The EITC is a refundable tax credit -- meaning you will receive money for it even if you don't owe taxes -- a valuable benefit for people who pay no or little taxes. If you claim the EITC, you need to wait a little longer for your tax refund -- by law, the IRS cannot issue refunds with the EITC until mid-February. The IRS says that if you claim the EITC, you should expect to see your refund by Feb. 27, 2024.

Tax credits for education expenses in 2024

The US tax code currently includes two tax credits for higher-education costs. The Lifetime Learning Credit and American Opportunity Tax Credit are very similar, but it's important to know the differences. 

The AOTC is more generous than the LLC, but it has a few more restrictions. The LLC has less of a monetary benefit but is more flexible for nontraditional college students, such as those who delayed starting college after high school or those who attend part time.

Lifetime learning credit: Introduced with the Taxpayer Relief Act of 1997, the LLC offers 20% back of the first $10,000 spent on higher education expenses at eligible institutions. The student can either be yourself, your spouse or a qualified dependent, as long as you paid the bills.

The maximum benefit per return is $2,000, regardless of how many students you support. The credit begins to phase out at $80,000 of modified adjusted gross income for single filers ($160,000 for married filing jointly) and is eliminated at $90,000 of MAGI ($180,000 for married filing jointly).

American opportunity tax credit: Designed to replace the Hope Scholarship credit -- which helped pay for the first two years of college -- the AOTC increased both the benefit amount and number of years that families could claim the incentive.

The AOTC provides 100% back on the first $2,000 in higher education expenses for you, your spouse or a qualified dependent, then gives 25% back on the next $2,000 for a total maximum benefit of $2,500. Along with tuition and fees, expenses for books, supplies and equipment are also eligible, but not room and board or transportation.

The AOTC is partially refundable -- you'll get 40% of the money from any extra credit beyond your taxes owed. Bronnenkant told CNET that's "an attractive feature" that gives parents "the choice to not claim the child as a dependent, so that a child with no income can claim the refundable portion." 

Both the LLC and AOTC are reported on IRS Form 8863. You are allowed to claim both credits on your tax return, but you can't take both credits for the same student and same year. You also cannot claim either tax credit if you are married filing separately.

Differences between educational expense tax credits

Rules Lifetime Learning CreditAmerican Opportunity Tax Credit
Refundable status NonrefundablePartially refundable (40%)
Academic progress No requirements for degrees or credentialsStudent must be pursuing degree or credential
Maximum benefit Up to $2,000 per returnUp to $2,500 per student
Eligibility requirement Includes undergraduate, post graduate and continuing studiesOnly first 4 years of higher education
Limit on years claimed Unlimited4 years per eligible student
Qualified expenses Tuition and feesTuition, fees and required course materials
Excluded behavior No exclusionsStudent cannot have felony drug conviction

Source: Compare Education Credits on EITC.IRS.Gov

Tax credits for health care in 2024

Premium tax credit: The premium tax credit is related to the Affordable Care Act and designed to help individuals and families pay the costs of health coverage purchased through the public Health Insurance Marketplace.

The premium tax credit is restricted to taxpayers who earn between 100% and 400% of the federal poverty guidelines. For 2021 and 2022, the upper limit restriction was eliminated, but it returns for 2023 income taxes. 

When you buy insurance through the public marketplace, you'll need to provide your income information, which will then be used to estimate your premium tax credit. If you like, you can receive advance payments of the premium tax credit during the year in order to pay your premiums.

If you received advance premium tax credit payments in 2023 or if you want to claim the full credit on your 2023 tax return, you'll need to complete Form 8962, "Premium Tax Credit." If the advance payments you received are greater than your eligible amount, you'll need to repay the difference. 

A question-and-answer app on the IRS website can help you determine whether you qualify for the premium tax credit. The premium tax credit is fully refundable.

Tax credits for investing and saving in 2024

If you invested money abroad or contributed to retirement accounts in 2023, you'll want to look at the saver's credit and the foreign tax credit.

Saver's tax credit: Officially named the retirement savings contributions credit, the saver's credit gives you money back on qualifying contributions to retirement accounts. Depending on your adjusted gross income (AGI), you can get 10%, 20% or 50% of your money back on:

  • Contributions to traditional or Roth IRAs
  • Salary deferrals for 401(k), 403(b), 457(b), SARSEP or SIMPLE plans
  • After-tax employee contributions to qualified retirement plans
  • Contributions to ABLE accounts for disabled people
  • Contributions to a 501(c)(18)(D) plan (an old, member-funded pension trust)

Here are the income restrictions and saver's tax credit percentage amounts for 2023:

How much you can claim for the saver's credit

Saver's credit rate Married filing jointly AGI limitHead of household AGI limitAGI limit for all other filing statuses
50% $43,500 or less$32,625 or less$21,750 or less
20% $43,501 to $47,500$32,626 to $35,625$21,751 to $23,750
10% $47,501 to $73,000$35,626 to $54,750$23,751 to $36,500
0% More than $73,000More than $54,750More than $36,500

Source: Retirement Savings Contributions Credit (Saver's Credit) on IRS.gov

To claim the saver's credit, you'll need to file Form 8880, "Credit for Qualified Retirement Savings Contributions."

Foreign tax credit: If you were taxed on your income by a foreign country in 2023 and that income is also taxable by the US, you could be eligible for a credit to reduce your tax bill. The foreign tax credit can apply to wages but also to stocks, bonds or mutual funds bought in foreign countries.

What's interesting about foreign taxes on income is that they can be claimed as either a tax credit or a tax deduction, though the IRS advises most taxpayers will benefit more from taking the credit. The foreign tax credit is calculated as a fraction of your total US tax liability, depending on total foreign and domestic income.

To claim the foreign tax credit, you'll need to file Form 1116, "Foreign Tax Credit (Individual, Estate, or Trust)."

Tax credits for home and car owners in 2024

Our final group of tax credits includes money back on your taxes for making energy efficient improvements to your home, first-time homebuyer credits and incentives for purchasing electric cars.

To make things extra complicated, the two home improvement credits have new rules for the 2023 tax year due to the Inflation Reduction Act (IRA) of 2022, but we'll break them down for you. 

Solar Panels on a home

If you installed solar panels in 2022, you could get 30% of the cost back.

Stephen Shankland/CNET

Residential clean energy credit: This home tax credit is the big one -- it provides 30% back on costs related to "solar electricity, solar water heating, wind energy, geothermal heat pumps, biomass fuel systems or fuel cell property." Fuel cell property is capped at $500 per half a kilowatt of capacity, but there are no other restrictions.

The IRA keeps the credit rate at 30% through 2032. After that, the credit will drop to 26% in 2033 and 22% in 2034 and then expire in 2035.

Energy efficient home improvement credit: Formerly called the nonbusiness energy property credit, this smaller home tax credit gives you money for the installation of Energy Star-certified products and qualified improvements like new windows or insulation. There are some big changes for this credit for the 2023 tax year, thanks to the IRA.

Previously, the tax credit offered $50 to $300 for installing eligible appliances like water heaters and furnaces, and 10% back for other energy efficiency improvements, with a $500 lifetime limit.

For energy efficient improvements made on or after Jan. 1, 2023, you can now claim up to $3,200 annually. Instead of flat fees for specific improvements, the energy efficient home improvement credit will now give you 30% back on qualified energy expenses.

The $3,200 annual limit for the energy efficient home improvement credit is broken down as follows:

  • $1,200 limit for qualified energy efficient improvements, with limits on doors ($250 per door; $500 total), windows ($600) and home energy audits ($150) 
  • $2,000 limit for qualified heat pumps, biomass stoves or biomass boilers

There's no lifetime limit on the credit anymore, but it's nonrefundable and you can't apply any excess credit to future tax years. To claim the energy efficient home improvement credit, the qualified expenses must be related to your primary residence (where you live most of the year).

You can learn more about qualified expenses for the energy efficient home improvement credit on the IRS website. You can claim both of the home energy credits on Form 5695, "Residential Energy Credits."

Mortgage interest credit: This credit for first-time homebuyers should be considered when you are purchasing a home, because you'll need to get a mortgage credit certificate (MCC) from your lender in order to qualify.

If your income qualifies you for an MCC, you can get a credit for a percentage of your mortgage interest up to $2,000. The percentage of interest that you can claim varies from state to state, ranging from 10 to 50 percent.

After claiming that set percentage of your mortgage interest as a credit, you'll then be able to take the remaining mortgage interest as a tax deduction, if you itemize.

The mortgage interest credit is nonrefundable, but, if your credits outweigh your taxes owed, you can "carry forward" extra credit money for up to three years.

Electric vehicle credits: There are two electric vehicle credits: One for installing a charging station on your personal property and another for purchasing an electric vehicle.

Tesla Powerwall battery backup

If you installed a Tesla Powerwall in 2023, you can likely claim the alternative fuel station tax credit.


If you installed any sort of charging station that uses alternative energy at your home in 2023, you can claim a tax credit worth 30% of the installation cost or $1,000, whichever is smaller. You'll need to file Form 8911, "Alternative Fuel Vehicle Refueling Property Credit."

Clean vehicle tax credit: If you purchased a new electric car or light truck in 2023, you might be eligible for up to $7,500, but there are several restrictions.

To qualify for the new EV credit, vehicles must have four wheels, weigh less than 14,000 pounds and run on an electric motor with a battery that lasts at least 7 kilowatt hours and can be charged externally.

The final assembly of your vehicle must have been completed in the US, and the manufacturer's suggested retail price (MSRP) can't be more than $55,000. There are also income limitations for the credit, depending on your filing status:

Income limits for EV tax credit

Filing status Income
Single $150,000
Head of household $225,000
Married, filing jointly $300,000
Married, filing separately $150,000

Source: Credits for new clean vehicles purchased in 2023 or after on IRS.gov

This year also marks the addition of a tax credit for used EVs purchased in 2023. The previously owned clean vehicle credit can give you up to 30% of your purchase price back or $4,000, whichever is lesser. Among other requirements, the price of the used EV can't exceed $25,000, and the model year of the car must be at least two years earlier than the year it was purchased. For your 2023 taxes, vehicles released in 2021 or earlier are eligible.

To claim either electric vehicle tax credit, file Form 8936, "Qualified Plug-In Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles)." The new clean vehicle credit can be claimed by completing Parts I, II, and III. The previously owned clean vehicle credit can be claimed by completing Parts I and IV.

Remember that you don't need to itemize deductions in order to claim tax credits, and that the best tax software will make it easy for you to identify all the credits that you can claim. Forget the forms, file electronically and use direct deposit to get the biggest refund possible in the quickest time.