Tax Credits That Can Lower What You Owe or Boost Your Refund
Which tax credits actually apply to young adults
The credits that matter most to you depend on your income, whether you're in school, and whether anyone claims you as a dependent. The Earned Income Tax Credit (EITC) is the largest — it can return $600 to $3,995 depending on how much you earned and whether you have dependents. The American Opportunity Tax Credit covers up to $2,500 of college costs if you're in your first four years of undergraduate study. The Child and Dependent Care Credit helps if you paid for childcare so you could work. There's also the Saver's Credit if you contributed to a retirement account on a modest income.
The catch: you can't claim most of these if someone else — usually a parent — claims you as a dependent on their return. The IRS allows only one person to claim you per year. If your parents claim you, they may be able to claim some credits instead, but you need to know which person gets which credit before either of you files.
Start by figuring out your dependency status. If your parents paid for more than half your living expenses in 2024, they can claim you even if you earned money. If you paid for more than half your own expenses, you file independently and can claim credits yourself. This one fact changes everything about which credits are available to you.
Key Takeaways
- The Earned Income Tax Credit returns money to workers with low to moderate income, and you may may have access to even if you owe no tax.
- If you're claimed as a dependent, your parents claim most education and dependent care credits instead of you — confirm this before filing.
- The American Opportunity Tax Credit covers college costs but only if you're in your first four years of undergraduate study and not claimed as a dependent.
- You need your Social Security number, proof of income (W-2 or 1099), and documentation of any expenses the credit covers — childcare receipts, tuition bills, or retirement account statements.
The Earned Income Tax Credit: how much you can get back
The EITC is designed for people who work but earn below a certain income threshold. For 2024, if you're single with no dependents, you can earn up to roughly $17,000 and still may have access to. The credit phases in as you earn more — you don't get the full amount unless you hit a certain income floor. The IRS website has a tool that shows you the exact amount based on your income and filing status.
The EITC is "refundable," which means if the credit is larger than the tax you owe, the IRS sends you the difference. This is one of the few credits that can result in a refund even if you paid no tax during the year. You claim it on Schedule EIC (Form 1040), and you'll need your Social Security number and proof of income — usually a W-2 from your employer or a 1099 if you're self-employed.
If you're claimed as a dependent, you cannot claim the EITC. Your parents can't claim it either if you're over 24 (with narrow exceptions for full-time students). This is one situation where being independent actually saves you money.
Education credits if you're in school
The American Opportunity Tax Credit covers tuition, fees, and course materials for the first four years of undergraduate study. It's worth up to $2,500 per year, and it's partially refundable — you can get back up to $1,000 even if you owe no tax. You need to be enrolled at least half-time in a degree program, and you can't have been convicted of a drug felony.
The Lifetime Learning Credit is smaller — up to $2,000 per return, not per student — but it covers graduate school, professional certifications, and courses to improve job skills. You can claim it for an unlimited number of years, but you can't claim both credits for the same student in the same year. Choose whichever gives you the larger benefit.
Both education credits require you to not be claimed as a dependent. If your parents claim you, they can claim the education credit instead, but only if they paid the tuition. If you paid it yourself with loans or work income, neither you nor your parents can claim the credit — it goes unused. This is why it matters who actually paid the bill.
You'll need your school's 1098-T form, which lists may have access to expenses. Schools send these by January 31. If your school hasn't sent it, contact the financial aid office — you can file without it and amend later, but having it upfront is simpler.
Childcare and dependent care credits
If you paid for childcare or adult dependent care so you could work, the Child and Dependent Care Credit can cover up to $3,000 of expenses. The credit is worth 20 to 35 percent of those expenses depending on your income — lower income means a higher percentage. You can claim it for children under 13 or for a spouse or parent who can't care for themselves.
You need receipts or statements from the childcare provider showing the amount paid, the provider's name, address, and tax ID (usually their Social Security number or EIN). If the provider won't give you this information, ask your employer's HR department — they may have it on file. Without documentation, you can't claim the credit.
Like the education credits, you can't claim this if someone else claims you as a dependent. If your parents claim you and also paid for your childcare, they can claim the credit. If you paid for it yourself, the credit is available only if you file independently.
The Saver's Credit for retirement contributions
If you contributed to a traditional IRA, Roth IRA, or your employer's 401(k) or 403(b) plan, and your income is below a certain threshold, you may may have access to for the Saver's Credit. For 2024, the income limit is roughly $68,000 for single filers. The credit is worth 10 to 50 percent of your contribution, depending on your income.
This credit is small compared to others — the maximum is $1,000 — but it's one of the few that rewards you for saving. You claim it on Form 8880, and you'll need a statement from your financial institution showing how much you contributed. The credit is not refundable, so it can only reduce the tax you owe, not create a refund.
You can claim the Saver's Credit even if someone claims you as a dependent, which makes it worth checking if you've been saving. Many young adults don't know this credit exists because it's small and requires you to have already opened a retirement account.
What documents you need before you file
| Credit | Documents to gather |
|---|---|
| Earned Income Tax Credit | W-2 or 1099; Social Security number; proof of address if self-employed |
| American Opportunity or Lifetime Learning | 1098-T from your school; receipts for any out-of-pocket expenses; proof you were enrolled at least half-time |
| Child and Dependent Care | Childcare provider's name, address, and tax ID; receipts or statements showing amounts paid |
| Saver's Credit | Statement from your IRA or retirement plan showing contributions made in 2024 |
Gather these before you start your return. If you're missing something, contact the issuer now — schools, employers, and financial institutions are busiest in late January and early February. If you file before you have all documents, you can amend your return later, but it's slower and creates more work.
Keep copies of everything you submit, whether you file on paper or electronically. The IRS can ask for proof years later, and having documentation protects you if there's a question about your return.
Frequently Asked Questions
Can I claim a tax credit if my parents claim me as a dependent?
Most credits — the education credits, the dependent care credit, and the EITC — cannot be claimed by you if you're claimed as a dependent. Your parents may be able to claim some of these instead, but only if they meet the requirements. The Saver's Credit is an exception: you can claim it even if someone else claims you as a dependent.
What if I paid for college but my parents claim me?
If your parents claim you as a dependent, they can claim the education credit only if they paid the tuition. If you paid it with your own money or with loans in your name, the credit cannot be claimed by either of you. This is a gap in the tax code, and it's worth discussing with your parents before either of you files.
Do I have to owe taxes to claim a credit?
No. Some credits are "refundable," meaning they can result in a refund even if you owe no tax. The Earned Income Tax Credit and part of the American Opportunity Credit are refundable. Other credits can only reduce the tax you owe. Check the specific credit to see whether it's refundable.
What if I don't have a 1098-T from my school?
Contact your school's financial aid office and ask them to send it or confirm it was mailed. You can file without it and amend your return later once you receive it, but it's simpler to wait. Schools must issue the 1098-T by January 31, so if it's mid-February and you haven't received it, follow up directly.
Can I claim a credit for expenses my parents paid?
Generally, no. The person who paid the expense claims the credit. If your parents paid for childcare or tuition, they claim the credit. If you paid for it, you claim it. The exception is if your parents claim you as a dependent — then they claim most credits regardless of who paid, as long as the expense qualifies.