Maximizing Your Tax Credits: A Guide for Families and Parents
Paying taxes can be challenging, so it's essential not to miss out on potential tax credits that could reduce your tax burden or increase your refund. The IRS advises parents and families to ensure that both the child and taxpayer have valid Social Security numbers to avoid any errors that could cost money. The Child Tax Credit is a valuable nonrefundable credit for families with qualifying children, worth up to $2,200.
To qualify for the Child Tax Credit, the child must meet certain criteria set by the IRS. This credit can help lower your tax burden until it reaches $0, but any remaining money won't be refunded. However, eligible parents can receive up to $1,700 as a refund under the Additional Child Tax Credit rules. This credit is particularly beneficial for working individuals with low to moderate incomes.
The earned income tax credit and retirement savers' credit are often overlooked by taxpayers, according to tax expert Lisa Greene-Lewis. The earned income tax credit can be up to $8,046 for a family with three children. To qualify for these credits, taxpayers must meet specific income and investment limits, be U.S. citizens or resident aliens, and have valid Social Security numbers.
Changes under the One, Big, Beautiful Bill have made the tax credit for adoptive parents partially refundable. Parents who finalized an adoption in 2025 or started the process before 2025 may be eligible for a refund of up to $5,000 out of a maximum of $17,280 per eligible child. This credit aims to offset adoption expenses incurred by parents.
Parents who paid for childcare while working or seeking employment may be able to claim a nonrefundable credit. The amount you can reduce your federal tax burden by depends on your income and the percentage of childcare expenses paid. The American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC) can help offset the cost of higher education, with the AOTC being partially refundable and the LLC being nonrefundable.
The AOTC and LLC are worth up to $2,500 and $2,000 per student, respectively. Eligibility criteria for these credits are detailed, and the IRS recommends using the Interactive Tax Assistant to determine if you qualify. Don't miss out on these valuable tax credits that can help you save money and maximize your refunds.