Unlock Hidden Tax Refunds: Top Tax Credits You Can Claim Today

Adam Hayes, Ph.D., CFA, is a seasoned financial expert with over 15 years of Wall Street experience as a derivatives trader. He holds advanced degrees in economics and sociology and teaches economic sociology at the Hebrew University in Jerusalem. Adam also possesses multiple FINRA licenses and is a CFA charterholder.

If your earnings fall below the threshold requiring you to file a tax return or you don’t expect a refund, you might consider skipping the process. However, this could cause you to miss out on valuable tax credits that qualify for refunds—even direct payments from the IRS. Filing requirements depend on factors like your age, filing status, and self-employment income above $400.

Even if your income tax liability is zero, filing a return can unlock tax credits that lead to refunds. Additionally, timely filing helps you avoid penalties associated with late or missing submissions.

Key Insights

• Filing a tax return can be beneficial even if you owe no taxes.
• For 2025, single filers have a $15,000 standard deduction; married couples filing jointly get $30,000. Falling below these doesn’t exclude you from refundable credits.
• The Earned Income Tax Credit (EITC) maximum increases from $7,830 to $8,046 in 2025.
• Additional credits are available for parents, health insurance premiums, education, and retirement savings.
• Low employment income combined with other earnings may still require you to file.

Get a Refund from Tax Withholdings

Filing a tax return even with income below the standard deduction allows you to reclaim withheld taxes, assuming no other tax obligations exist. Completing IRS Form 1040 is straightforward, and free online services like TurboTax and H&R Block simplify the process.

If you qualify for any of these five refundable credits, filing your federal taxes is worth it.

Earned Income Tax Credit (EITC)

Designed to support low-income workers, the EITC reduces tax liability and can provide a cash refund if the credit exceeds taxes owed. Qualification depends on earned income and adjusted gross income limits, updated annually.

Child Tax Credit

This credit assists low- to middle-income families by offering up to $1,700 refundable credit per dependent child in 2025. Income limits apply, phasing out benefits for higher earners.

American Opportunity Tax Credit (AOTC)

The AOTC reimburses up to $2,500 annually for qualifying education expenses. Recent expansions allow taxpayers with no tax liability to receive refunds, making it a valuable credit for students and families.

Health Insurance Marketplace Premium Tax Credit

This credit helps cover health insurance costs purchased through the ACA Marketplace for households earning between 100% and 400% of the federal poverty level. Eligibility details are available on the IRS website.

Saver’s Credit

Contributions to retirement plans like 401(k)s or IRAs may qualify for this credit, offering up to $1,000 ($2,000 if filing jointly) or the amount of taxes owed without the credit.

Avoid Penalties by Filing

Even if you don’t meet minimum income thresholds, filing may be necessary if you earned over $400 from self-employment, sold property for a gain, or withdrew from retirement accounts. You might owe Social Security, Medicare taxes, or be subject to the Alternative Minimum Tax (AMT), all requiring timely filing to avoid penalties and interest.

Understanding Tax Credits and Refunds

A tax credit reduces your tax liability dollar-for-dollar. While not a refund itself, a credit can produce a refund if your tax payments exceed your tax owed.

The Child Tax Credit reduces taxable income and may yield a refund up to $1,700 per child in 2025.

Final Thoughts

Always consider filing a tax return even if your income is low. You may qualify for significant tax credits that result in refunds, making it worthwhile to explore your eligibility and claim what you deserve from the IRS.

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