Tax Deductions and Tax Credits Most People Miss

Financial Horizons: Insights for Building Wealth and Securing Your Legacy

By Dr. Jose G. Cardenas, Chief Tax Strategist at The C & R Group, LLC

When tax season comes around, most people focus on getting their returns filed as quickly as possible. But rushing often means leaving money on the table in the form of unclaimed tax deductions and tax credits.

Understanding how deductions and credits work—and which ones apply to you—can significantly reduce your tax bill and free up more cash for savings, investing, and building your legacy.

Tax Deductions vs. Tax Credits: What’s the Difference?

Before we look at specific opportunities, it’s important to understand the distinction:

• Tax deductions reduce the amount of income that is subject to tax.
• Tax credits reduce your actual tax bill dollar-for-dollar.

Both are valuable, but credits are often more powerful because they directly lower the tax you owe. The key is knowing where you qualify and making sure nothing gets overlooked.

Here are some of the most popular—and commonly missed—tax deductions and credits you should review before you file.

Student Loan Interest Deduction

If you or your dependent have qualifying student loans, you may be able to deduct a portion of the interest you paid during the year.

This deduction can apply even if you don’t itemize, making it especially helpful for:

• Recent graduates
• Parents who took out loans for their children
• Professionals who returned to school to improve their skills

By reducing your taxable income, this deduction can lower your overall tax liability and make student debt a bit more manageable.

American Opportunity Tax Credit (AOTC)

The American Opportunity Tax Credit is designed to help offset the cost of the first four years of higher education for eligible students.

You may qualify if you:

• Are enrolled at least half-time in a program leading to a degree or recognized credential
• Have qualified education expenses such as tuition, required fees, and course materials

A unique advantage of the AOTC is that a portion of the credit may be refundable—meaning you could receive money back even if your tax bill is zero.

Child Tax Credit

For families with children, the Child Tax Credit can be a significant benefit.

If you have qualifying children under a certain age, this credit can:

• Reduce your tax bill
• Potentially provide a refundable amount, depending on your income and filing status

Because eligibility rules and amounts can change, it’s important to ensure you are using the most current guidelines and claiming the full amount you qualify for.

Adoption Credit

Adopting a child is a profound and joyful step—but it can also be expensive. The Adoption Credit helps reduce the financial burden by providing a credit for certain qualified expenses, including:

• Adoption fees
• Court and attorney costs
• Required travel expenses related to the adoption

This credit can be particularly valuable for families who have made a long-term commitment to providing a permanent home for a child.

Lifetime Learning Credit

While the American Opportunity Tax Credit is focused on the first four years of undergraduate education, the Lifetime Learning Credit is more flexible and can be used for a broader range of educational pursuits.

You may qualify if you are:

• Taking undergraduate, graduate, or professional courses
• Enrolling in classes to acquire or improve job skills

You do not need to be pursuing a degree to claim this credit, which makes it a valuable tool for lifelong learners and professionals investing in continuing education.

Earned Income Tax Credit (EITC)

The Earned Income Tax Credit is one of the most powerful credits available to low-to-moderate income workers—and also one of the most frequently overlooked.

The amount of the credit depends on:

• Your earned income
• Your filing status
• The number of qualifying children you support (you may still qualify with no children in some cases)

Because the EITC can be refundable, it may result in a substantial refund even if you do not owe any tax. Failing to claim it is like leaving free money with the IRS.

Medical and Dental Expense Deduction

If you had significant out-of-pocket medical or dental expenses, you may be able to deduct a portion of those costs if you itemize your deductions.

Eligible expenses can include:

• Doctor and dentist visits
• Prescription medications
• Certain medical procedures and equipment
• Some long-term care costs

While there is an income-based threshold you must exceed before claiming this deduction, taxpayers who experienced a major health event or high medical costs in a given year should carefully review their records.

Charitable Contributions Deduction

If you itemize deductions, you may be able to deduct contributions made to qualified charitable organizations. This can include:

• Cash donations
• Non-cash donations such as clothing, household items, or vehicles
• Donations of appreciated securities in some cases

To maximize this deduction:

• Keep detailed records and receipts
• Verify that the organization is a qualifying charity
• Track the fair market value of non-cash contributions

Strategic charitable giving can reduce your tax bill while supporting causes that reflect your values.

Why Tax Planning Matters More Than Tax Filing

Most people think about taxes once a year—right before the deadline. True wealth builders think about taxes all year long.

Proactive tax planning allows you to:

• Identify which deductions and credits you can position yourself to qualify for
• Time certain expenses or investments to maximize your tax benefits
• Coordinate your tax strategy with your retirement, insurance, and estate planning

Instead of seeing taxes as a once-a-year headache, view them as an ongoing opportunity to keep more of what you earn and direct those dollars toward your financial goals.

Final Thoughts

The tax code is full of opportunities—but only if you know where to look. Popular deductions and credits like student loan interest, education credits, the Child Tax Credit, EITC, medical expenses, and charitable contributions can make a meaningful difference in your financial picture.

You worked hard for your income. Strategic tax planning helps ensure more of it stays working for you, your family, and your legacy.

If you’re unsure whether you are taking full advantage of the deductions and credits available to you, it may be time for a professional review.

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About the Author

Dr. Jose G. Cardenas is a retired U.S. Army Finance Officer and the Chief Tax Strategist at The C & R Group, LLC. With a Doctorate in Business Administration and over 20 years of experience in financial strategy, tax planning, and life insurance, Dr. Cardenas helps individuals and business owners protect their wealth and build a legacy. Learn more at www.thecrgroupllc.com

📌 Disclosure

This article is for educational and informational purposes only and is not intended to serve as personalized legal, tax, or investment advice. Tax laws are complex and subject to change. You should consult with a qualified tax professional about your specific situation before making any decisions. Dr. Jose G. Cardenas, DBA, provides tax advisory services through The C & R Group, LLC. Insurance strategies, including Indexed Universal Life (IUL) and annuity products, may be offered through his role as a licensed financial professional affiliated with Experior Financial Group.

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