Schedule 3, Additional Credits and Payments

This Schedule is used to report certain tax credits and payments that aren't included in the main Form 1040.

Part I: Nonrefundable Credits: These credits can reduce the amount of tax you owe to zero, but won’t provide a refund if they're worth more than your total tax liability.. Common nonrefundable credits on Schedule 3 include:

  • Foreign tax credit: If you paid taxes to a foreign country.
  • Credit for child and dependent care expenses: If you paid someone to care for your child or another dependent while you worked or looked for work.
  • Education credits: There are two education credits (the American Opportunity Credit and the Lifetime Learning Credit) which may be available if you, your spouse, or your dependents attended post-secondary school.
  • Retirement savings contributions credit (saver's Credit): For lower-income taxpayers who contribute to a retirement plan.
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Part II: Other payments and refundable credits: These credits are called “refundable” because if they reduce your tax liability below zero, you can receive the balance as a refund. They include:

  • Health coverage tax credit: Helps eligible individuals and families pay for certain types of health insurance coverage.
  • Excess Social Security and tier 1 RRTA tax withheld: If you had multiple employers and they collectively withheld too much Social Security tax or Railroad Retirement Tax Act (RRTA) tax, you can claim the excess here.
  • Credits from Form 2439, 8885, or other forms: Credits reported on these forms would be entered here.

After you've filled out the relevant sections of Schedule 3, you add up your credits and payments and include this total on your main Form 1040.