How to Find and Claim Last Minute Tax Credits
Learn how to reduce your tax liability with steps you can take before filing, from making new contributions to reviewing past expenses for missed savings.
As the tax filing deadline approaches, many individuals seek ways to lower their tax liability. A distinction exists between tax deductions and tax credits. Deductions reduce your taxable income, while credits provide a dollar-for-dollar reduction of the taxes you owe, making them more impactful. This guide explores actions you can take after the year has ended and how to identify overlooked credits from the previous year’s activities to decrease your final tax bill.
Tax-Saving Contributions Before the Filing Deadline
Even after the calendar year ends, you can make contributions to lower your taxable income for the year that just passed. Contributions to specific retirement and health savings accounts can be made up until the tax filing deadline, which is April 15th. These contributions generate a tax deduction, reducing your adjusted gross income (AGI) and the amount of tax you owe.
A common strategy is contributing to a Traditional Individual Retirement Arrangement (IRA). For the 2024 tax year, you can contribute up to $7,000, or $8,000 if you are age 50 or older, as long as you have taxable compensation. The deductibility of these contributions depends on your income and whether you are covered by a retirement plan at work. If neither you nor your spouse is covered by a workplace plan, your full contribution is deductible. If you are covered, the deduction may be limited based on your modified adjusted gross income (MAGI).
Health Savings Accounts (HSAs) offer another opportunity for a prior-year tax deduction. To contribute to an HSA, you must have been covered by a high-deductible health plan (HDHP). For 2025, an HDHP must have a minimum deductible of $1,650 for self-only coverage or $3,300 for family coverage. The maximum contribution for 2025 is $4,300 for individuals and $8,550 for families, with an additional $1,000 catch-up contribution allowed for those age 55 and older.
For self-employed individuals and small business owners, a Simplified Employee Pension (SEP) IRA allows for retroactive retirement savings. Contributions can be made for the previous tax year up until the business’s tax filing deadline, including extensions, which could be as late as October 15th. The amount that can be contributed is up to 25% of compensation, not to exceed $69,000 for 2024 or $70,000 for 2025. Your financial institution reports these contributions on Form 5498 or Form 5498-SA.
Identifying Overlooked Credits from the Past Year
A review of your financial activities from the completed tax year can uncover valuable credits. Focusing on common areas like education, dependent care, and home energy improvements can yield significant savings.
Two primary education credits are the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The AOTC is available for the first four years of post-secondary education and is worth up to $2,500 per eligible student, with up to $1,000 being refundable. The LLC is broader, covering undergraduate, graduate, and professional development courses, and offers a nonrefundable credit of up to $2,000 per tax return.
The Child and Dependent Care Credit is for those who paid for care for a qualifying individual, such as a child under 13 or a disabled spouse, to allow them to work or look for work. The credit is a percentage of your work-related expenses, with a maximum of $3,000 in expenses for one qualifying person and $6,000 for two or more.
Investing in clean energy for your home can also lead to tax savings through the Residential Clean Energy Credit. This credit applies to the cost of new, qualified clean energy property like solar panels, solar water heaters, and geothermal heat pumps. For property installed from 2022 through 2032, the credit is 30% of the cost, with no overall dollar limit except for fuel cell property. You will need detailed receipts of all costs, including installation, and any manufacturer certifications.
The Saver’s Credit for Retirement Contributions
Beyond the deduction for retirement contributions, a separate tax credit exists called the Retirement Savings Contributions Credit, or Saver’s Credit. This nonrefundable credit is designed to help low- to moderate-income individuals save for retirement. It can be claimed for contributions to a variety of plans like Traditional and Roth IRAs, 401(k)s, and SEP IRAs. The same contribution that generated a deduction could also make you eligible for this credit.
Eligibility is determined by your adjusted gross income (AGI) and filing status. For the 2024 tax year, the maximum AGI to qualify is $38,250 for single filers, $57,375 for heads of household, and $76,500 for married couples filing jointly. You must also be at least 18, not claimed as a dependent, and not a full-time student for five months of the year.
The credit amount is a percentage—50%, 20%, or 10%—of the first $2,000 in retirement contributions, or $4,000 if married filing jointly. The percentage depends on your AGI. For example, a single filer in 2024 with an AGI of $23,000 or less receives a credit equal to 50% of their contribution, up to a $1,000 maximum. The amount of your eligible contribution may be reduced by any recent distributions from a retirement account.
Claiming Your Credits on the Tax Return
After gathering all necessary documentation, the final step is to report deductions and credits correctly on your tax return. Tax preparation software simplifies this process by guiding you through sections for items like retirement contributions, education, and child care expenses. You will navigate to a main section often labeled “Deductions & Credits.”
You will be prompted to enter information from your documents. For education credits, you will need Form 1098-T, and for the Child and Dependent Care Credit, you need the provider’s name, address, and Taxpayer Identification Number (TIN), which they can provide on Form W-10. The software uses this information to populate the correct IRS forms. The Saver’s Credit is calculated on Form 8880, education credits on Form 8863, and the Child and Dependent Care Credit on Form 2441.
These forms calculate the specific credit amount you are entitled to. The final credit amounts are then transferred to Schedule 3 (Form 1040), Additional Credits and Payments. For example, the totals from Form 8880 and Form 8863 are entered on this schedule. The total credits from Schedule 3 are then used to reduce your total tax liability on your main Form 1040.