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‘Substantial Tax Savings:‘ 10 Accountants Reveal the Tax Credits and Deductions Americans Too Often Miss

Individual tax returns are due by April 15. Here are some tax credits you’ll want to check for.

By: Lara Becker and Shelby Fishman

Tax season is officially here. And if saving money is your biggest priority this year, there are plenty of tax breaks to take advantage of. Sadly, many of you might be leaving money on the table.

From the Child Tax Credit to the state sales tax deduction, we asked certified public accountants and certified financial planners what tax credits and deductions filers often miss.

“The most overlooked tax credits involve energy home improvements.” — Doug Throneburg, CPA, CFP and Head of Wealth Management at Byline Bank.

“Two types of credits are available: Energy Efficient Home Improvement Credit or the Residential Clean Energy Credit,” says Throneburg. These work well if you use renewable energy in your home, including solar.

He adds that some people also “often miss key tax credits, such as the Child Tax Credit, education credits or deductions for medical expenses,” as well as “leave money on the table without realizing it by not taking full advantage of financial tools like IRAs and HSAs… For example, contributing the maximum allowable amounts to 401(k)s or IRAs can reduce taxable income. Additionally, HSAs allow for tax-free growth and withdrawals for qualified medical expenses, making them a valuable long-term tax planning tool.”

People may not realize that small deductions can add up. — Brian Kearns, CPA and CFP at Haddam Road Advisors

“One thing that taxpayers may not take into account is how a bunch of smaller itemized deductions can, with good record keeping, add up to much more than the standard deduction ($15,000 single, $30,000 joint).

For example, if you add up all your qualifying medical expenses, like prescriptions, dental and vision care, medicare premiums, or insurance premiums if you’re self-employed, you can quickly get over the 7.5% of AGI hurdle.  

Also, how many bags of old kids clothes do you drop off at Goodwill (they do change size every year)? Those can add up if you cost out each item and get a receipt. Again the key is good record keeping.”

Many fail to maximize retirement contributions. — Mark Luscombe, CPA and principal analyst for Wolters Kluwer’s tax and accounting division in North America

Luscombe says that some of the biggest deductions and credits people miss are failing to maximize contributions to tax-favored retirement accounts such as 401(k)s and IRAs. In addition, he advises against “failing to look for netting opportunities with capital gains and losses before year-end” and “failure to consider the state sales tax deduction as an alternative to the state income tax deduction in years when there has been a major purchase, such as a car, boat, or RV.”

People miss the Earned Income Tax Credit and the retirement savers credit. — Lisa Greene-Lewis, CPA and Spokesperson for TurboTax

“There are two valuable credits that the IRS reports one out of five people miss every year. The Earned Income Tax Credit is up to $7,830 for a family with three kids and the Retirement Savers Credit you may be able to get just for investing in your retirement up to $1,000 single and up to $2,000 married if you’re filing jointly,” she notes.

Other items she says she sees people miss include:

• The potential for a dependent credit up to $500 if you support significant other, friend, or relative.
• The Child Tax Credit of up to $2,000 for parents with a child under 17 and the child and dependent care credit of up to $1,050 for one child and up to $2,100 for two or more kids. Summer day camp even counts.
• American Opportunity Tax Credit of up to $2,500 per college student for the first for years of college or the Lifetime Learning Credit, which reduces eligible tuition, fees and other expenses at a qualified institution, up to $2,000 per return

“Taxpayers leave money on the table every year simply because they don’t know what they qualify for.” — Mark Gallegos, CPA and Partner at Porte Brown

“Understanding these deductions and credits can lead to substantial tax savings and better financial planning,” he says, noting that these are among the overlooked credits and deductions:

• Qualified Business Income Deduction: Small business owners and self-employed individuals can deduct up to 20% of their qualified business income.
• Energy-Efficient Home Improvements
• Child and Dependent Care Credit
• Medical Expense Deduction: If unreimbursed medical expenses exceed 7.5% of AGI, they may be deductible, covering costs like prescriptions, long-term care, dental, vision, and even medical travel expenses.
• Student Loan Interest Deduction: Taxpayers can deduct up to $2,500 in student loan interest, even if someone else (like a parent) made the payments, as long as they’re not claimed as a dependent.
• State Sales Tax Deduction: Taxpayers can deduct either state income tax or sales tax, which is especially beneficial for residents in states without an income tax. The deduction is capped at $10,000.”

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Please Note: This article was originally published by MarketWatch. Updated: March 27, 2025 at 10:50 a.m. ET