Are you expecting a tax refund this year? Millions of taxpayers are, but as many as 1 million individuals could unknowingly be missing out.
The average refund amount this tax season was $3,116, according to the latest data from the IRS. As of April 4, the tax agency has paid over $211 billion in tax refunds after processing over 100 million tax returns. More than 140 million individual tax returns were expected to be filed by the April 15 deadline.
For many U.S. households, the federal tax refund is the largest check they will receive this year. Some folks, particularly those who don’t file because they don’t earn enough, may be missing out on a bunch of tax breaks and deductions.
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The IRS warns that close to a million individuals who fail to file prior-year returns are potentially owed a tax refund each year. Even though the April 15 federal deadline has passed, the IRS doesn’t penalize you if you’re due a refund check.
Here are some popular tax credits you don’t want to skip. Some could be expiring this year.
You may qualify for the Earned Income Tax Credit
The earned income tax credit (EITC) is a federal tax break designed for workers with low- and moderate-income, with or without children who work part or full-time. It’s also a refundable credit, meaning you can get a refund even if you don’t owe taxes.
Nationwide, 23 million eligible workers received $64 billion in EITC last year. As reported by Kiplinger, the average taxpayer received about $2,743 in tax credits for the 2023 tax year (taxes filed in early 2024). This year, your refund could be bigger.
- For 2024, the EITC is worth up to $7,830 for eligible families with three or more children, up from $7,430 the previous year.
- Meanwhile, eligible workers ages 25 to 64 without kids can claim up to $632 for 2024.
Some states have also built a supplemental tax credit for individuals eligible for the federal EITC.
For example, Rhode Island became the first to create its own version of the earned income credit in 1986. To date, 31 states plus the District of Columbia and Puerto Rico offer EITC.
You can also claim local EITC in Montgomery County, Maryland, New York City, and San Francisco. According to the Institute on Taxation and Economic Policy (ITEP), around 700,000 households claimed the local level EITC.
Don’t miss the Child Tax Credit
The child tax credit (CTC), claimed by more than 46 million taxpayers each year, is a family tax break for parents and caregivers with dependent children under 17.
This year, you can get up to $2,000 per child. How much you’ll receive depends on your modified adjusted gross income (MAGI) and filing status. The refundable portion of the credit is worth up to $1,700.
Like the earned income tax credit, some states have enacted an additional child tax credit payment for households that are eligible for the federal credit.
For example, Minnesota offers the largest state child tax credit in the nation. For the 2023 tax year, more than 223,000 Minnesotan taxpayers claimed the tax break, which averaged $1,242. Eligible households may qualify for a tax credit worth up to $1,750 per qualifying child, with no limit on the number of children claimed.
So, make sure your state offers the child tax credit.
It’s worth noting that the federal child tax credit is slated to decrease by the end of 2025 due to sunsetting provisions of President Donald Trump’s Tax Cuts and Jobs Act (TCJA). The Republican-led Congress is drafting a comprehensive legislative package referred to as Trump’s ‘one big beautiful bill’ to expand this and other tax cuts.
If lawmakers fail to expand the TCJA in time, the child tax credit will drop to $1,000 per qualifying child.
Child and Dependent Care Tax Credit
The child and dependent care tax credit is a non-refundable tax break for working parents or caregivers. It’s also at risk of being repealed by the Republican-led Congress to help fund Trump’s proposed tax cuts.
Currently, the credit is worth 20% to 35% of qualifying expenses and is based on your adjusted gross income. The maximum amount of qualifying expenses you can claim for the 2024 tax year is:
- $3,000 for one qualifying person
- $6,000 for two or more qualifying dependents
There’s also a Credit for Other Dependents
If you don’t qualify for the federal child tax credit, you may be able to claim the Credit for Other Dependents. This credit can be claimed in addition to the Child and Dependent Care Credit and the EITC.
- The maximum credit amount is $500 for each qualifying dependent
- The credit phases out if the taxpayer’s income is more than $200,000 (single), or $400,000 (for couples filing jointly)
Worth noting: This tax credit was created as part of Trump’s Tax Cuts and Jobs Act of 2017 and is due to expire at the end of the year unless Congress extends the provision.
Tax breaks for college students
If you’re a student, taxes are likely the last thing on your mind. However, you could be missing out on education tax credits and deductions that can help you recover some of the expenses tied to your college costs.
This tax season may also be the last chance for you to claim popular tax breaks like the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC), as they are earmarked on the list of potential tax breaks on the GOP’s chopping block.
What are these tax credits good for?
- With the AOTC, eligible taxpayers (a student, parent, or spouse) can claim up to $2,500 in relief for qualified expenses. These may include tuition, fees, and necessary items such as books or supplies.
- The Lifetime Learning Credit is a tax credit that covers 20% of the first $10,000 of qualified education expenses, or a maximum of $2,000 per return. There’s no limit on the number of years you can claim this tax break.
You can still file for free
If you missed the April 15 tax deadline, don’t panic just yet. You can still file your tax return, and if you are due a refund, the IRS won’t penalize you for filing a late return.
You can also file for free directly with the IRS, but the clock is ticking.
- Taxpayers who have yet to file their 2024 tax return and earned $84,000 or less last year have until Oct. 15, 2025, to file with an IRS Free File partner.
- Qualified taxpayers in 25 states have until Oct. 20, 2025, to file with IRS Direct File.
In case you missed it, the Trump administration reportedly plans to eliminate the Direct File program. So, this could be your last opportunity to use the free filing program.
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