How to Claim Tax Credits You May Qualify For

Tax credits can lower what you owe and, in some cases, increase your refund. But credits are not automatic. You usually need to file a tax return, answer eligibility questions correctly, and keep records that support the credit you claim.

In this guide, you’ll learn how to claim tax credits you may qualify for, what documents to gather, and how to avoid claiming credits that do not fit your situation.

TL;DR: Quick Decision Guide

• If you had children, dependents, education expenses, retirement contributions, or Marketplace health insurance → check for tax credits before filing.
• If your income is low or moderate → review refundable credits, especially the Earned Income Tax Credit.
• If a credit is refundable → it may increase your refund even if you owe little or no tax.
• If you are not required to file → filing may still be worth it if you qualify for a refundable credit.
• If someone promises a big refund from a credit you do not understand → verify before filing.

Step 1: Understand What Tax Credits Do

A tax credit reduces the amount of tax you owe. The IRS explains that tax credits are subtracted from your bottom-line tax due, and refundable credits can give you money back even if you do not owe tax.

That makes credits different from deductions.

For example, a $1,000 deduction does not usually save you $1,000. It lowers taxable income. A $1,000 credit may reduce your tax bill by $1,000, depending on the credit type and your eligibility.

What to do:
When filing, review credits separately from deductions. Do not assume they work the same way.

👉 Explore: Tax software and free filing options in the Marketplace →

Step 2: Make a List of Life Events From the Year

Tax credits are often connected to real-life changes. Before filing, think through what happened during the tax year.

You may want to check for credits if you:

• Had a child
• Supported a dependent
• Paid for childcare
• Paid college or job training expenses
• Contributed to a retirement account
• Bought health insurance through the Marketplace
• Had low or moderate earned income
• Adopted a child
• Made eligible home energy improvements
• Bought a qualifying clean vehicle
• Paid taxes to a foreign country
• Started or ended school
• Had a major income change

The IRS says tax credits can reduce what a person owes dollar-for-dollar, and some credits are refundable, meaning they may increase a refund.

What to do:
Write down any major family, school, health insurance, work, or home changes from the year. Then match those events to possible credits.

👉 Read: How to Decide if You Should File Taxes Even If You’re Not Required To →

Step 3: Check Common Individual Tax Credits

You do not need to know every credit in the tax code. Start with the credits most likely to apply to individuals and families.

For the 2026 filing season, the IRS noted that tax law changes brought updates to some deductions and credits, including new identification requirements for certain dependent-related credits.

What to do:
Use reputable tax software, IRS resources, or a qualified preparer to check credits based on your actual facts, not guesses.

Step 4: Know Whether the Credit Is Refundable

Refundability affects how much the credit can help.

Nonrefundable credits can reduce your tax to zero, but they usually do not create a refund beyond that.

Refundable credits can reduce your tax to zero and may give you the remaining amount as a refund.

Partially refundable credits may allow only part of the credit to be refunded.

The IRS says many people who qualify for refundable credits miss out because they do not file a return.

What to do:
If you are not required to file but may qualify for a refundable credit, consider filing anyway.

Step 5: Gather Documents That Prove Eligibility

Credits usually require proof. The exact records depend on the credit.

Common records include:

The IRS says taxpayers should keep records to show eligibility for credits and deductions.

What to do:
Create a “Credits” folder inside your tax folder. Save forms and proof before you start filing.

Step 6: Use Tax Software or a Preparer Carefully

Tax software can help identify credits, but it depends on the information you enter. A tax professional can help when eligibility is unclear, but you still need to provide accurate records.

Read the questions carefully, especially questions about:

• Filing status
• Dependents
• Where a child lived
• Who paid support
• Education expenses
• Health insurance Marketplace coverage
• Retirement contributions
• Earned income
• Self-employment income
• Energy improvements

What to do:
Do not click through credit questions quickly. A wrong answer can cause you to miss a credit or claim one incorrectly.

Step 7: Coordinate Credits With Other Taxpayers

Some credits involve more than one person. This is common with children, dependents, divorced or separated parents, college students, and shared households.

Be careful when:

• A parent may claim a college student
• Divorced parents share custody
• More than one person helped support a dependent
• A grandparent, parent, or relative lives with you
• You and another taxpayer paid childcare costs
• A student wants to file separately from parents

Only one taxpayer can usually claim the same dependent for the same tax year. If two returns claim the same person, one return may be rejected or delayed.

What to do:
Before filing, confirm who is claiming each dependent and which credits connect to that dependent.

Step 8: Avoid False Credit Claims and Risky Advice

Credits are valuable, so they attract bad advice. Be careful with tax tips from social media, strangers, refund-focused preparers, or anyone promising a large refund before reviewing your documents.

Watch for red flags like:

• “Everyone qualifies”
• “This credit is secret”
• “You do not need proof”
• “Just make up income”
• “Claim your business losses this way”
• “The IRS won’t check”
• “Pay me from your bigger refund”
• “Sign now, we’ll finish later”

The IRS warns taxpayers to rely on trusted advice from the IRS, tax professionals, and reputable sources, and notes that knowingly filing fraudulent returns can lead to civil and criminal penalties. The IRS has also warned about ghost preparers and misleading tax credit scams, including claims many taxpayers do not qualify for.

What to do:
If a credit sounds too good to be true, pause. Verify it before filing.

Common Mistakes to Avoid

• Assuming credits are applied automatically
• Not filing when you may qualify for a refundable credit
• Confusing deductions with credits
• Missing Form 1095-A for Marketplace insurance
• Forgetting education credits
• Claiming a dependent another person already claimed
• Not saving childcare provider information
• Claiming credits based on social media advice
• Signing a return with credits you do not understand

FAQs on Claiming Tax Credits You May Qualify For

Final Thought

Claiming tax credits is not about chasing every possible refund. It is about understanding what you qualify for, keeping the right records, and filing accurately.

Credits can make a meaningful difference, especially for workers, parents, students, caregivers, and people using Marketplace health insurance. Take the time to check, but claim only what truly fits your life.

Next Steps:

• 👉 Learn: How Tax Credits Reduce What You Owe →
• 👉 Related: How Tax Deductions Reduce Your Taxable Income →
• 👉 Learn: How to Avoid Bad Tax Advice and Risky “Tax Hacks” →
• 👉 Explore: Tax software and free filing options in the Marketplace →