6 Tax Credits That You Shouldn't Overlook

Here are 6 tax credits that can help you with the cost of education, child care, and improving your home.

Tax credits are different from deductions in that unlike deductions (which reduce the amount of income you’re required to pay tax on)—credits lower the actual amount of tax you need to pay.

Most are for low or moderate income individuals and families, but if you qualify—the Consumerist Tax Cat says: Don’t overlook them!

Here is information about 6 tax credits that you may qualify for, and how to get them, from the IRS:

1) Earned Income Tax Credit
This credit s for low to middle-income workers and their families. Working families who make less than $39,783 and childless workers with incomes under $14,590 may qualify. To help figure out if you qualify for this credit, click here.

2) Child Tax Credit
If you’ve got a kid under 17, you probably qualify for this credit, says the IRS. This credit is in addition to the deduction that you take for each dependent and is different from the “Child Care Credit.” Questions? Click here.

3) Education Credits
If you’re enrolled at least half-time in a post-secondary school, you may be able to take the Hope credit or the lifetime learning credit. Watch out, the IRS says, you can’t deduct your tuition and fees and take these credits, so be careful to choose the right one. To figure out if you qualify for these credits, click here.

4) Child Care Expense Credit
If you have a child under 13 who you pay someone to care for, you are probably able to take this credit, says the IRS. You may also qualify if you have a dependent who requires care who is older than 13, so read the rules carefully. Form 1040 filers claim the credit for child and dependent care expenses on Form 2441 (PDF). Form 1040A filers claim it on Schedule 2.

5) Saver’s Credit
If you have a low or moderate income and you’ve contributed to a 401k or IRA, you may be eligible for this credit. If you’ve made less than $26,000 for singles and married people who are filing separately, or $39,000 for heads of household, or $52,000 for joint filers, you might be able to take this credit. If you haven’t made any contributions yet, don’t worry—you’ve got until April 15, 2008.

6) Energy-Saving Credit
If you’ve made energy-saving improvements on your home (and didn’t take this credit in 2006) you may be eligible for up to $500 in credits. Energy-saving improvements include things like new insulation, better windows, water heaters, doors, etc. Click here. (PDF)



Edit Your Comment

  1. Celticlady says:

    I LOVE the tax cat!!


  2. Nighthawke says:

    Now if I put in CF bulbs in my place, does that count as a energy-saving credit?
    I’d say it should if your electric company billed you for the dammed things.

  3. mantari says:

    REQUEST: Please do not show us the Flat Tax Cat. DO NOT WANT!!

  4. darkened says:

    @mantari: I’d prefer flat tax cat and no IRS, capital gains tax, endowment tax, etc etc etc

  5. omgyouresexy says:

    I just started preparing my taxes last night, and I only really qualify for the Education Credit. It was interesting. I noticed two different way of claiming some kind of Education expenses, one being the Lifetime Learning Credit and the other being the tuition and fees paid deduction. I tried both and the Lifetime Learning Credit got me a slightly better return than the deduction, however I apparently have to wait until Feb. 8th to file that because the “form is not yet available”. Anyway, to anyone else filing, make sure to compare those two options, because one may get you more than another.

  6. gfinakoma says:

    #4 will be a lifesaver since my sons daycare is the second highest bill I pay every month.

  7. aloe vera says:

    @gfinakoma: Same here – it’s second only to our mortgage.

  8. gfinakoma says:

    @aloe vera: yep,sadly, we’re singing the same tune.

  9. madanthony says:


    No, it specifically does not include CFL’s (I just did mine in TurboTax last weekend and it actually said it does not).

    I did, however, get $55 for my new front door, which I replaced not to save energy, but because I could no longer open it from the outside.

  10. mzs says:

    Wow thanks I completely did not know about the Energy-Saving Credit and we bought new windows last year!

  11. speedwell (propagandist and secular snarkist) says:

    Don’t forget that if you had someone living with you all year or most of it who was not working or worked very little, and you provided more than half their support for the year, you may be able to claim them as a dependent even if they are not your child or even related to you. I was able to claim my partner while he was in grad school. Review the rules for deciding who qualifies.

  12. That70sHeidi says:

    I’m not exactly clear on the #5 issue… in 2007 I worked as a temp starting in April before going full time in July and immediately contributing to their 401K. I’m sure I’m under $26K for the year, and I think I’ve contributed about $600 in that period to 401K.

    However, my CONTINUED contributions until April 15th still count towards that savings sum, but my earnings DON’T count towards the income? (how does THAT work?!)

    This is why I have people to do my taxes. This is way too difficult.

  13. sparrowmorgan says:

    Actually, I’m curious about the IRA credit too — I’m going to be opening a Roth IRA this week, but will my contributions made before April 15 count towards the 2007 or 2008 limit?

  14. gingerCE says:

    College students should look into the EIC credit. I know a couple students who qualified and got a few hundred extra. The catch is you can’t be a dependent on your parent’s taxes.

  15. gingerCE says:

    @omgyouresexy: Are you using a tax program? Turbo Tax will automatically choose which one gets you more money back.

  16. Truthie says:

    I can has tax refund?

  17. If I didn’t make any contributions myself to a 401k, but my employer made a contribution for me, am I eligible for a Saver’s Credit?

  18. bufftbone says:

    Another school loan tip, you can claim the interest paid on loans made too.

  19. omgyouresexy says:

    I just use one of the online tax filing services. It’s free, so I stick with that. I tried both just because I was curious what the difference was, but I was surprised the credit gave me a higher refund.

    And I looked into the EIC credit, but the impression I got (and what t he IRS website also told me) was that I had to be 25 to get that credit, and sadly I’m only 24. :(

  20. reishka says:

    @omgyouresexy: Yeah, that’s the same for me. You have to be Over 25 and under 65 to be eligible for the EIC credit… which sucks for people like me. I’m 21, completely autonomous from any living relative, and make ~32k a year. I have another 4 years before I can be eligible. wtf?