Tax Credits First-Time Filers Often Overlook

Many first-time filers overlook tax credits that can trigger a refund—like the EITC, Saver’s Credit, and education credits. Even with low income, filing could put money back in your pocket.

Why Tax Credits Matter for First-Time Filers

If you’re filing taxes for the first time, there’s good news: the IRS offers a range of credits first time filers can use to lower the income tax they owe—or even boost their refund. Unlike deductions, which reduce taxable income, tax credits directly reduce your tax bill—dollar for dollar. Translation: credits mean real cash back.

Many first-time taxpayers don’t realize that even with a small income, they may be eligible for refunds or credits. Filing is not just about compliance—it’s how you unlock money the IRS owes you.

Common missed credits include:

• Earned Income Tax Credit (EITC)
• Child Tax Credit
• American Opportunity Tax Credit
• Lifetime Learning Credit
• Retirement Saver’s Credit
• Dependent Care Credit

The Earned Income Tax Credit (EITC): Refund Gold for Working Filers

The earned income tax credit (EITC) is one of the biggest missed opportunities for first-time filers. Designed for low- to moderate-income workers, the EITC can reduce the federal taxes you owe and even create a tax refund if your credit exceeds your tax bill.

EITC for First-Time Filer: Are You Eligible?

You may qualify for the EITC if:

• You earned income from a job or self-employment.
• Your adjusted gross income (AGI) falls below IRS limits.
• You have a valid Social Security number.
• You file with an eligible filing status (Single, Head of Household, or Married Filing Jointly).

Married Filing Separately generally disqualifies you. For Tax Year 2025, you must have investment income below $11,950 to qualify for the Earned Income Tax Credit (EITC).

You may qualify for a smaller EITC amount even if you don't have children. If you do have a qualifying child, foster child, or dependent, the credit can increase significantly.

EITC Income & Credit Limits (Tax Year 2025)

👉 Example: A single filer earning $25,000 with one qualifying child could get an EITC worth up to $4,328.

Sources:

• IRS, Internal Revenue Bulletin: 2024-40
• IRS, Earned Income Tax Credit

Education Tax Credits: A+ Savings for Students

If you paid tuition or bought textbooks last year, you might qualify for one of two education tax credits that first-time filers often overlook.

Whether you’re a full-time student or have recently finished school, education credits can help offset tuition and learning expenses. These credits often go unclaimed by first-time filers who don’t realize their education expenses qualify.

American Opportunity Tax Credit (AOTC)

The American Opportunity Tax Credit (AOTC) offers up to $2,500 per eligible student, phasing out for MAGI over $80,000 (single) or $160,000 (joint). You can claim the credit for qualified tuition, books, and supplies during your first four years of higher education. It’s partially refundable, which means you can get money back even if you owe no tax.

To qualify:

• Be enrolled at least half-time.
• Have qualified expenses (tuition, books, and supplies).
• Do not claim the AOTC more than four times.

Lifetime Learning Credit

If you’re beyond your undergrad years or taking courses to improve job skills, the Lifetime Learning Credit offers up to $2,000 per return. There’s no limit to how many years you can claim it.

The AOTC and Lifetime Learning Credit reward you for investing in education—but they’re not identical. Use this quick comparison to see which credit gives you the bigger break based on your enrollment status and expenses.

Sources:

• American Opportunity Tax Credit
• Lifetime Learning Credit

Saver’s Credit: A Hidden Boost for Retirement Savers

If you contributed to a 401(k), IRA, or Roth IRA, the Saver’s Credit could give you an additional tax break—especially for moderate income workers and first-time filers.

This credit rewards taxpayers who invest in their future by reducing taxable income and offering a credit worth up to $1,000 ($2,000 for married filing jointly).

You may be eligible if:

• You’re over 18 and not a full-time student.
• You may qualify for the Saver’s Credit if your adjusted gross income (AGI) is $39,500 or less (Single and Married Filing Separately), $59,250 or less (Head of Household), or $79,000 or less (Married Filing Jointly).
• You made contributions to eligible retirement accounts.

Sources:

• IRS Saver’s Credit page
• IRS, 2025 Amounts Relating to Retirement Plans and IRAs

Child Tax Credit: Extra Support for Families

For parents and caregivers, the Child Tax Credit (CTC) is one of the most valuable credits. Worth up to $2,200 per qualifying child, the CTC helps reduce the taxes you owe—and may even trigger a refund through the Additional Child Tax Credit.

To qualify, your child must:

• Be under 17 at the end of the tax year.
• Have a valid Social Security number.
• Be your dependent (including foster child or adopted child).
• Live with you for more than half the year.

Families with multiple children can see major savings here. Don’t forget to check if you’re also eligible for the Dependent Care Credit if you paid for childcare while working or job hunting.

Example: A single parent with two children under 17 could receive a total of $4,400 through the CTC.

Source:

• Big Beautiful Bill
• Child Tax Credit

Deductions vs. Credits: Know the Difference

A common mistake among first-time filers is confusing itemized deductions with tax credits. Here’s a quick cheat sheet:

If your standard deduction is higher than your itemized deductions, it’s usually best to stick with the standard option. You can also use our Credits Checklist to see which option saves you more.

Filing Status, Income, and Eligibility

Your filing status, income, and age all affect which credits you qualify for and how much you can claim. For example, married filing jointly often raises income thresholds, while married filing separately can disqualify you from the EITC and subject you to AGI thresholds as if you were single for the Saver’s Credit.

If your situation feels complicated (e.g., multiple jobs, self-employed, or shared custody), consider working with a tax professional or using trusted tax software.

Special Tax Situations First-Time Filers Should Watch For

• Self-employed or gig workers can still qualify for the EITC and Saver’s Credit—just make sure you report all income and expenses.
• Homeowners may deduct mortgage interest and property taxes.
• Families paying for dependent care (like daycare) could qualify for the Dependent Care Credit.
• If you pay health insurance premiums out of pocket, you might qualify for premium tax credits under the ACA.

Even if you owe no federal taxes, these credits could generate refunds—so always file online rather than skipping your return.

Social Security and Filing Requirements

You’ll need a valid Social Security number (or ITIN) to claim most credits. If your name doesn’t match your SSN record, the IRS may delay your refund—so correct errors with the Social Security Administration before filing.

Also, if you received Social Security income, be sure to include it on your return—it can affect your taxable income and credit eligibility.

Pro Tip: If you’ve changed your name recently, update your record with the SSA before filing to avoid refund delays.

How to Claim These Credits

Claiming your credits is easier than you think. Here’s how first-time filers can make sure nothing slips through the cracks.

1. File your return (even with low income).
   You can’t get these credits if you don’t file—period.
2. Use reliable tax software to check for eligible credits automatically.
3. Double-check dependents and income to ensure your credits are maximized.
4. Submit before the due date (typically April 15).
5. Review your refund status using the IRS “Where’s My Refund?” tool.

Common Mistakes That Cost First-Time Filers

• Not filing because you “didn’t earn enough.”
  (You could still get a refund through credits.)
• Filing as married filing separately when jointly would yield a better refund.
• Forgetting education expenses or retirement contributions.
• Claiming ineligible dependents (double-check IRS rules).
• Missing IRS updates for the new tax year thresholds.

Avoid these pitfalls by reviewing our ✅ Credits Checklist before submitting your return.

Final Takeaway: Don’t Leave Money on the Table

Tax credits first time filers qualify for can make a huge difference. These benefits can mean hundreds or even thousands back in your pocket, from the EITC to education credits and the Saver's Credit.

Bottom line: Don’t skip your return. Even with low income, filing can unlock refundable credits that may result in a tax refund.

Download the Credits Checklist to make sure you claim every credit you’ve earned this tax time.