The information in this article is up to date for tax year 2024 (returns filed in 2025).
Trying to navigate the tax world can be overwhelming, especially if you’re not a tax expert. However, failing to take advantage of valuable tax credits can leave money on the table. Fortunately, using tax software like ezTaxReturn and familiarizing yourself with available tax breaks can help maximize your tax refund and reduce your tax liability. In this article, we’ll explore some key tax breaks that can save you thousands of dollars in taxes.
1. Earned Income Tax Credit (EITC)
Many taxpayers mistakenly believe that if they don’t earn enough to owe taxes, they don’t need to file. However, not filing could mean missing out on the Earned Income Tax Credit (EITC), which is a refundable credit that can put money directly into your pocket. If you’re earning less than $66,819, you may be eligible for the EITC.
This credit is particularly helpful for lower to moderate-income workers, with the amount increasing if you have qualifying children. Here’s what you need to know:
- Income Limits: To qualify, your earned income and adjusted gross income (AGI) must be below certain thresholds, which vary based on your filing status and number of dependents.
- Investment Income Limit: You cannot earn more than $11,600 in investment income to qualify for the EITC.
Credit Amounts for tax year 2024:
- $632 with no qualifying children
- $4,213 with one qualifying child
- $6,960 with two qualifying children
- $7,830 with three or more qualifying children
Last year, 23 million taxpayers received the EITC, but 1 in 5 eligible workers still missed out. Make sure you’re not one of them by filing with ezTaxReturn and getting the biggest possible refund.
2. Saver’s Credit
According to AARP, 20% of adults aged 50+ have no retirement savings. While retirement may seem far off, it’s crucial to start saving now, even on a tight budget. The Saver’s Credit, also known as the Retirement Savings Contributions Credit, rewards taxpayers who contribute to retirement accounts like IRAs or employer-sponsored 401(k)s.
The Saver’s Credit can be worth:
- 10%, 20%, or 50% of contributions, up to $2,000 ($4,000 if married filing jointly).
- This means single filers can receive a credit of up to $1,000, and married couples can receive up to $2,000.
The exact percentage of the credit depends on your AGI, so it’s important to check eligibility based on your income. This credit can significantly boost your retirement savings while reducing your tax bill.
3. Child Tax Credit & Additional Child Tax Credit
Having children is not just a blessing—it can also be a huge tax break! The Child Tax Credit (CTC) can save you up to $2,000 per child under the age of 17. Plus, if your tax bill is lower than the credit, you may qualify for the Additional Child Tax Credit (ACTC), which is refundable, meaning you could get a portion of the credit refunded to you.
Eligibility for the CTC:
- Child must be under age 17 at the end of the year.
- Must be a U.S. citizen, U.S. national, or U.S. resident alien.
- Must live with you for more than half the year.
By claiming the Child Tax Credit, you can lower your taxable income and potentially get a substantial refund.
4. Child and Dependent Care Credit
If you’re a parent or guardian, childcare costs are likely one of your largest expenses. Fortunately, you may qualify for the Child and Dependent Care Credit, which allows you to claim up to 35% of your eligible care expenses. This can be a big help if you have young children or dependents who require care.
- Credit Limits: The maximum you can claim is $3,000 for one child or $6,000 for two or more children.
- Qualifying Expenses: Care expenses for children under 13, or for a dependent who is physically or mentally unable to care for themselves, may be eligible.
To qualify, the care must be provided while you and your spouse are working or looking for work, and the care provider cannot be a family member. This credit helps offset the burden of childcare costs and can give families a much-needed financial break.
5. American Opportunity Tax Credit (AOTC)
With college tuition fees steadily rising, the American Opportunity Tax Credit (AOTC) can provide significant relief for students and parents. This credit is available for the first four years of postsecondary education and can help cover expenses like tuition, enrollment fees, and textbooks.
- Up to $2,500 per eligible student.
- The credit is partially refundable, meaning you could get up to $1,000 back if the credit exceeds your tax liability.
To qualify for the AOTC:
- The student must be pursuing a degree or recognized credential.
- Must be enrolled at least half-time for one academic period during the year.
- Cannot have a felony drug conviction.
With the AOTC, you can reduce the financial burden of higher education while saving on your taxes.
6. Lifetime Learning Credit (LLC)
The Lifetime Learning Credit (LLC) is another education-related tax credit that can save you money. Unlike the AOTC, there’s no limit to the number of years you can claim the LLC, making it a good option for graduate students or those seeking professional development.
- Up to $2,000 per tax return.
- This credit is available for tuition, fees, and other related expenses for courses taken at eligible institutions.
To qualify:
- Must be enrolled in a program that improves job skills or leads to a degree or certification.
- The student can be enrolled part-time or full-time.
Note: You can’t claim both the LLC and AOTC for the same student in the same year, so you’ll need to choose the one that provides the greatest benefit.
7. Mortgage Interest Deduction
If you own a home and pay a mortgage, the mortgage interest deduction can save you a significant amount in taxes. Homeowners can deduct interest paid on mortgages for up to $750,000 ($1 million for mortgages taken before December 15, 2017).
- What’s deductible: Interest on loans used to buy, build, or improve your primary or secondary home.
- Property Taxes: You can also deduct state and local property taxes, subject to a cap of $10,000.
This tax break is especially valuable for homeowners with large mortgage payments.
8. Health Savings Accounts (HSAs)
If you have a high-deductible health plan (HDHP), contributing to a Health Savings Account (HSA) is one of the best ways to save on taxes while saving for future medical expenses.
- Contributions are tax-deductible.
- Earnings grow tax-free.
- Withdrawals used for qualified medical expenses are also tax-free.
For 2024, you can contribute:
- $4,150 for individual coverage
- $8,300 for family coverage
- $1,000 extra if you’re 55 or older.
HSAs provide a triple tax benefit and can help you reduce your taxable income while planning for healthcare costs.
9. Charitable Donations
Charitable giving not only helps those in need but can also reduce your taxable income. Donations to qualified charities are deductible, whether they’re cash donations or in-kind gifts like clothes or furniture.
- What’s deductible: Cash donations, property donations, and even appreciated assets like stocks.
- Keep Records: Make sure to keep receipts and records of your donations, especially if you’re donating high-value items.
Charitable deductions can add up, so be sure to maximize them by keeping track of your donations throughout the year.
10. State-Specific Tax Breaks
In addition to federal tax breaks, many states offer their own set of deductions and credits. These can include benefits for homeowners, education, and even specific tax relief programs for local disasters or economic challenges.
- State-Specific Deductions: Some states allow deductions for items like student loan interest, property taxes, or tuition fees.
- Local Credits: Check for local programs that can help you save even more.
Each state’s tax rules differ, so be sure to research state-specific opportunities. By taking advantage of these tax breaks, you can effectively reduce taxes and keep more money in your pocket.
Conclusion
Tax breaks are available for all kinds of taxpayers, from parents and students to homeowners and retirees. By using ezTaxReturn and staying informed about available credits and deductions, you can significantly reduce your tax bill and increase your refund. Don’t leave money on the table—take advantage of these valuable tax breaks and get the maximum refund you deserve!
Ready to save on your taxes? Use ezTaxReturn to easily file your tax return and claim all the credits and deductions you’re entitled to.
The articles and content published on this blog are provided for informational purposes only. The information presented is not intended to be, and should not be taken as, legal, financial, or professional advice. Readers are advised to seek appropriate professional guidance and conduct their own due diligence before making any decisions based on the information provided.
