Since millions of Americans miss out on valuable tax credits, it’s like they are just leaving money on the table. Citizens do not claim these 3 valuable tax credits not because they don’t qualify, but simply because they don’t realize these credits exist. As stated by the IRS, more than 9 million taxpayers failed to file returns in the year and thus left behind billions in unclaimed refunds. Nevertheless, those who do file their tax returns tend to overlook these credits. Irrespective of whether that is due to a lack of awareness or not, citizens may still qualify for certain tax credits that fly under their radar and hence they must know about these credits.
1. Tax credit for other dependents
Although most citizens are clued up on the Child Tax Credit, few citizens know that there is even a Tax Credit for Other Dependents. This tax credit has been specially created to support family members who are not children under the age of 17. Citizens are able to qualify for up to $500 per eligible dependent with this credit.
Other dependents are classified as a disabled child, elderly parents, or even a citizen who simply lives with you and depends on you for the support. To claim this tax credit, the dependents don’t need to be related to you by blood, they merely need to live in your household. A core requirement for dependents is that they must have a Social Security number or ITIN. Dependents must also be citizens of the U.S or a resident alien.
Although this credit exists, many citizens miss this credit as they see it as being synonymous with the Child Tax Credit, which has earned far more publicity. Citizens who are supporting someone other than a child under 17 should consider claiming for this credit when filing their taxes.
2. Another tax credit: Saver’s Credit
For citizens who continuously put money into a retirement account, a little benefit called Saver’s Credit or the Retirement Savings Contributions Credit may be a possibility. This credit is given to low-and moderate-income taxpayers who intend saving for the future. However, many citizens remain oblivious about this credit.
Citizens could receive a credit worth 10%, 20%, or even 50% of their retirement contributions to qualifying accounts like a 401(k), Roth IRA, or traditional IRA depending on their income and filing status. The rule to receive this credit is that citizens must be 18 or older and not be a full-time student in order to qualify.
The aspect of the Saver’s Credit that most citizens fail to realize is that it is basically a free bonus to ensure responsible retirement planning and this credit goes unnoticed by citizens who skip it yearly.
3. Residential Energy Credits- energy efficient homes
As per certain expansions under the Inflation Reduction Act, residential energy credits have been deemed valuable credits for many homeowners. Citizens who have opted for efficient improvements to their homes can file for this credit. Energy efficient solutions include the installation of new windows, insulation, and solar panels which could lead to a credit amount estimated at 30% of your expenses.
Two main credits in this category are the Energy Efficient Home Improvement Credit, which has a $1,200 annual cap, and the Residential Clean Energy Credit, which has no cap at all. The only exception to earn both of these credits is that the credits are only applicable to a citizen’s primary residence and these credits must be claimed in the year the upgrades have been made only.
Most of these credits get overlooked as citizens are unaware that they qualify for these credits. However, guidance is seen as valuable in helping thousands to save while reducing their tax bill dollar-for-dollar. All three credits could make a great impact on citizens’ tax returns. It’s better to try out for these credits than to leave money on the table. However, citizens must remember to meet the tax deadline always to avoid penalties.
