Getting a tax refund often feels like luck, but it usually comes down to knowing which tax credits you qualify for and claiming them correctly. Tax credits can help reduce your tax bill dollar-for-dollar. Some are even refundable, meaning you could get money back from the IRS even if you don’t owe any taxes. GOBankingRates spoke to David A. Perez, a tax professional and founder of Tax Maverick, who said many people miss out on tax credits because they don’t understand how they work or if they qualify. He ...

Core Insights - Understanding tax deductions and tax credits is essential for effectively reducing tax liabilities and maximizing savings [1] Tax Credits - A tax credit provides a dollar-for-dollar reduction of the tax owed, directly lowering the tax bill [2] - Refundable tax credits can result in a refund if they exceed the tax liability, while nonrefundable credits can only reduce the tax bill to zero without generating a refund [3][4] - Eligibility for tax credits is determined by specific qualifications related to income and tax filing status, with common credits available for low to moderate income individuals, small business owners, and families [5][7] - Popular tax credits include the child tax credit and the earned income tax credit, which assist families and low-income earners [9] - Education credits such as the American Opportunity Tax Credit and Lifetime Learning Credit provide financial relief for educational expenses, with the former being refundable up to $2,500 per student [10][11] - Healthcare credits like the Premium Tax Credit help low- to moderate-income families cover health insurance premiums purchased through the marketplace [15][16] Tax Deductions - Tax deductions reduce taxable income rather than the tax bill directly, with the impact depending on the taxpayer's tax bracket [17] - Deductions can be classified as above-the-line or itemized, with above-the-line deductions applicable even if the standard deduction is claimed [18][19] - Common above-the-line deductions include self-employment expenses, while itemized deductions encompass student loan interest, medical expenses, and charitable donations [20][26] - Taxpayers must ensure that itemized deductions exceed the standard deduction to effectively minimize tax liability [24] Interaction of Tax Credits and Deductions - Tax credits and deductions can be used in conjunction to lower overall tax liabilities, with tax credits providing more direct financial benefits [30][31] - For example, a taxpayer with an income of $100,000 could reduce their taxable income through deductions and further lower their tax bill with applicable tax credits [28][29]

It’s no secret that kids are expensive, but the child tax credit can offset a small portion of those costs. The child tax credit is a tax break that can lower your tax bill dollar for dollar and could even help you score a bigger refund. The One Big Beautiful Bill Act (OBBB) made a few changes to the credit for tax year 2025 that affect the return you’ll file by April 15, 2026. We’ll walk you through updates to the child tax credit rules, plus some other tax credits for families with children. Learn more ...