Credits are dollar-for-dollar reductions in tax liability. That makes them more valuable than deductions, and new preparers miss them constantly.
Earned Income Tax Credit
The EITC is one of the largest credits available, worth up to several thousand dollars for low-to-moderate-income taxpayers with qualifying children. It’s also one of the most frequently missed because of its complex eligibility rules. The IRS requires Form 8867 (due diligence checklist) for every return claiming the EITC. If your client has earned income in the qualifying range, run the numbers. Don’t assume they don’t qualify.
Child and Dependent Care Credit
If a client paid for childcare (daycare, after-school programs, day camps) so they could work or look for work, they may qualify. New preparers miss this because they don’t ask about childcare expenses during intake. Add it to your standard client questionnaire.
Saver’s Credit
Clients with low-to-moderate income who contributed to a retirement account may qualify for the Retirement Savings Contributions Credit, up to $1,000 ($2,000 for joint filers). This credit is missed constantly because preparers don’t ask about retirement contributions.
American Opportunity Tax Credit
Worth up to $2,500 per eligible student for the first four years of post-secondary education. Forty percent is refundable. Your client needs a Form 1098-T from the educational institution. Parents often don’t realize they can claim this, and students who file independently sometimes should be claimed as dependents instead.
Lifetime Learning Credit
Covers education beyond the first four years, including graduate school and professional development courses. Maximum $2,000 per return, not per student. Not refundable, but it catches situations the American Opportunity Credit doesn’t cover.
Credit for Other Dependents
A $500 non-refundable credit for dependents who don’t qualify for the Child Tax Credit (often older children ages 17 and up, or qualifying relatives). It’s easy to overlook because the software doesn’t always flag it prominently.
Energy Credits
Clients who made qualifying energy-efficient home improvements (insulation, windows, heat pumps, solar panels) may qualify for credits under IRC Section 25C or 25D. These are growing in value and frequency, and many clients don’t realize their home improvement projects have tax benefits.
The Pattern
You find credits by asking the right questions during intake, not by waiting for the software to flag them. Build a comprehensive client questionnaire that covers childcare, education, retirement contributions, energy improvements, and dependents of all ages.
For training that covers every major credit and how to build an intake process that catches them, visit musespring.com.