Americans Are Missing Out on Billions in Tax Credits as the IRS Reveals Five Overlooked Ways to Cut Your Bill

Americans forfeit billions in federal tax credits offered by the IRS every year. The Wall Street Journal's Lori Ioannou identified five credits that many overlook, meaning thousands leave money unclaimed per household.

These credits apply across nearly every stage of life. Students can get help with tuition. Young parents can claim childcare costs, including summer camps. Working families earning up to $68,675 get cash back. Mid-career savers are rewarded for retirement contributions. Homeowners can claim energy improvement credits — but only until the end of December. Most people miss at least one they qualify for. Here's a rundown of each.

Five Tax Credits Leaving Money on the Table

1. Lifetime Learning Credit – Not Just for Undergraduates

This non-refundable credit covers postgraduate study, trade programmes, and professional development courses — not just bachelor's degrees. You can claim up to $2,000 per year, based on 20% of the first $10,000 spent on tuition and fees. There's no limit on how many years you can claim it, unlike undergraduate-only credits.

You're eligible if your income is under $80,000 as a single filer or $160,000 jointly. Many assume education credits end after a bachelor's, but this one applies at all levels of study if you qualify.

File Form 8863 with your tax return. You'll need your university's Form 1098-T showing tuition paid.

2. Child and Dependent Care Credit – Summer Camps Qualify

This non-refundable credit helps cover childcare, babysitters, and summer camps while you work. You can claim between 20% and 50% of expenses, depending on your income — up to$3,000 for one child or $6,000 for two or more. That's a maximum of $1,500 for one child or $3,000 for multiple children.

The child must be under 13, and both parents need to work or actively seek work. Summer camps qualify. Many parents don't realise camp tuition counts, leaving hundreds unclaimed each summer.

File Form 2441 with your return. You'll need the care provider's tax ID and total payments made.

3. Earned Income Tax Credit – One in Five Never Claim It

This refundable credit is the most significant missed opportunity. One in five eligible families don't claim it, missing out on up to $8,046 if they have three or more children. Even singles with no children can claim up to $649.

The credit applies if you earned up to $61,555 as a single filer or $68,675 filing jointly in 2025. You need to have worked, hold a Social Security number, and keep investment income under $11,950. Many think it's only for the very poor or large families, but the income limits actually cover a large middle-income group.

File your return using Form 1040 or 1040-SR if you're a senior. If claiming for a child, attach Schedule EIC.

4. Retirement Savings Contributions Credit – Many Don't Know It Exists

This non-refundable credit rewards you for saving in an IRA, 401(k), or similar account. Many don't realise they can claim it. The credit covers up to 50% of your contributions, with a maximum of $1,000 for singles or $2,000 for couples.

You qualify if your income is below $39,500 as a single or $79,000 jointly. You can't claim if someone else lists you as a dependent, if you're a full-time student over 18, or if you recently withdrew money from a retirement account.

File Form 8880 and attach Schedule 3.

5. Energy Efficient Home Improvement Credit – Expires 31 December

This credit disappears in less than a month. It's worth up to 30% of what you spend on energy upgrades, capped at $3,200 in total. Qualifying improvements include insulation, windows, doors, heat pumps, water heaters, and solar panels. An energy audit can earn you $150.

The credit is only for your primary US residence, and you must buy from manufacturers registered with the IRS. Many think energy tax breaks ended years ago, but this one runs through the end of December — and it's unlikely to be renewed.

Keep receipts showing the manufacturer's ID number. File using Form 5695.

Only One is Refundable

Four of these credits are non-refundable. That means they can reduce your tax bill to zero but won't give you money back beyond that. The Earned Income Tax Credit is different — it's refundable. Even if your tax bill is zero, you can receive a cheque. For families with three or more children, this can be worth up to $8,046.

The energy credit expires on 31 December 2025. The other four renew annually, with an April deadline. Tax software or a professional can help you claim them.