20 — Schedule 3 Credits Updated for tax year 2025

What this line means

Nonrefundable credits from Schedule 3, Part I. These include the foreign tax credit, education credits (Lifetime Learning Credit), retirement savings contributions credit (Saver’s Credit), child and dependent care credit, energy credits, and other credits that reduce your tax but cannot take it below zero. These are added to the Child Tax Credit on line 19 to get total credits.

Does this apply to you?

• You paid income taxes to a foreign country and want to avoid double taxation (Foreign Tax Credit)
• You paid tuition and qualify for the Lifetime Learning Credit (the nonrefundable education credit)
• You are a low-to-moderate income filer who contributed to a retirement account (Saver’s Credit)
• You paid for child or dependent care so you could work (Child and Dependent Care Credit)
• You made energy-efficient home improvements (Residential Energy Credit)

Easy to overlook

The Foreign Tax Credit for mutual fund investors If you own international mutual funds or ETFs, your fund likely paid taxes to foreign governments on your behalf. The amount appears on your 1099-DIV Box 7. You can claim a Foreign Tax Credit for this amount even though you never directly paid a foreign government. Many mutual fund investors with small foreign tax amounts ($300-$600) leave this credit unclaimed. ¹ [SOURCE: IRS Schedule 3 instructions — Nonrefundable Credits]

The Saver’s Credit for low-income retirement savers If your AGI is below $39,500 (single) or $79,000 (MFJ) for 2025 and you contributed to a 401(k) or IRA, you may qualify for a credit of 10% to 50% of your contribution, up to $1,000 ($2,000 for joint filers). This credit is separate from the tax deduction you already got for the contribution — it is an additional benefit that many eligible filers miss entirely. ² [SOURCE: General filing pattern — education credits and foreign tax credit missed]

Watch out for this

Claiming the American Opportunity Credit on this line instead of line 29. The American Opportunity Credit is partially refundable and goes on line 29 in the payments section. The Lifetime Learning Credit is fully nonrefundable and goes here on Schedule 3. Putting the wrong education credit on the wrong line either understates your refund or overstates your tax reduction.

Related lines on your return

• Schedule 3, Part I — Form 1040 — Detailed breakdown of all nonrefundable credits
• Line 19 — Form 1040 — Child Tax Credit; combined with line 20 for total credits on line 21
• Line 21 — Form 1040 — Total credits; the sum of lines 19 and 20