Have other student tax filing questions? Be sure to visit our Tax Guide for College Students and find out about student forms that can be filed for free.

Which college expenses are tax deductible?

Due to tax changes in recent years, the rules around which college expenses are tax deductible or allow you to take a credit have changed. The list below covers categories of higher education expenses you may have questions about. Take a look to see which expenses still qualify as tax deductible.

• Qualified tuition and fees are no longer tax deductible after 2020. The Tuition and Fees deduction was an adjustment to income if you incurred qualified education expenses for you, your spouse, or your dependent.
• Work-related education expenses were previously tax deductible, but this deduction is not available for employees from 2018-2025 due to changes to itemized deductions with tax reform. Before this change, you may have benefitted from a deduction if the education was required by your employer or by law. However, if you are self-employed, you may be able to deduct education expenses. The education must enhance or improve skills related to your trade or business or must be required by law.
• Student loan interest, a college expense that generally applies in an after-college scenario, is still tax deductible. This college expense tax deduction lets you reduce your taxable income by up to $2,500 for qualified student interest paid during the year. In this case, qualified means the loan was only for education expenses, not for other types of expenses. The requirements state that the student must be the taxpayer, spouse, or dependent. The student must have been enrolled at least half-time at an eligible institution, and the program must lead to a degree, certificate, or other recognized credential. Furthermore, the loan cannot be from a related person or a qualified employer plan. Find additional student loan interest deduction criteria.

What is considered a qualified education expense?

Although key education expenses like tuition and fees are no longer tax deductible, you might be able to claim a credit by using the American Opportunity Credit or the Lifetime Learning Credit. Tuition and fees may be considered qualified education expenses, but the details can vary beyond those costs.

• American Opportunity Credit – In addition to tuition and required fees, you may include expenses for books, supplies, and equipment (including computers if required as a condition of enrollment) — even if they are not paid to the school. You must satisfy all requirements for the American Opportunity Credit to be able to receive the credit for these expenses.
• Lifetime Learning Credit – Included with qualified tuition and fees, you can count costs for course-related books, supplies, and equipment (including computers) required to be paid to the educational institution. Note that although the tuition and fees deduction is no longer available, starting in 2021 the income limits for the Lifetime Learning Credit have been increased, so the credit is now available for more students.

What doesn’t count as qualified expenses?

The Internal Revenue Service has rules for what you can and cannot deduct as a qualified expense. In general, insurance, medical expenses, transportation, and living expenses are not qualified school expenses for an education credit. Likewise, non-credit courses are not qualified education expenses, unless they are part of a degree program.

For more information about eligibility and requirements for these benefits, review our article on education tax credits. For details about college savings accounts and qualified expenses, check out our information about saving for college and reducing your tax bill.

Tax tip: Keep your documentation!

Schools will provide (via mail or electronic portal) the student with a Form 1098-T, which will reflect tuition and fees amounts that the school receives in payment. You may also use payment receipts or any other kind of statements showing the payment of qualified education expenses.

Need help determining deductible college expenses?

Whether you choose to file with a tax pro or file with H&R Block Online, H&R Block can help you determine which college expenses are deductible. We’ll help you get the maximum tax benefit for your education-related expenses.

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Understanding the tax rules, including the mortgage interest deduction limit, is key to taking this income tax deduction. Learn more about deducting mortgage interest in this post.

Who qualifies for the mortgage interest tax deduction?

First, let’s answer the question, “How does mortgage interest work?” When you repay a home mortgage loan each month, you pay a principal amount, plus interest. While money paid toward principal isn’t deductible, the interest is.

If you itemize deductions on Schedule A, you can deduct qualified mortgage interest paid on a qualifying residence, including your:

• Main home, or
• Second home

Homeowners must be legally responsible for repaying the loan to deduct the mortgage interest. Also, the interest must be paid on a debt that is an acquisition indebtedness, which is a debt incurred or assumed to acquire, construct, reconstruct, or substantially improve real property that is secured by the debt.

You can increase your mortgage interest deduction by making extra mortgage payments yearly. For example, if you pay your January mortgage in December, you’ll have one extra month’s interest to deduct. However, you can deduct only what qualifies as home mortgage interest for that year. This might work in your favor when it comes to mortgage points (a fee you can pay to help lower your mortgage interest rate). And if the loan proceeds are used to substantially improve the main residence, the points are fully deductible in the year the mortgage is refinanced

What qualifies as mortgage interest?

As a taxpayer, you can fully deduct most interest paid on home mortgages if all the Internal Revenue Service’s (IRS) requirements are met. You must separate qualified mortgage interest from personal interest. Mortgage interest is usually deductible, but personal interest isn’t.

Mortgage interest deduction limit

The deduction for mortgage interest is allowed for home acquisition debt. (A home mortgage is also called acquisition debt.  These debts are used to buy, build, or improve your main or secondary home.)

If you’re questioning, “How much mortgage interest can I deduct on my taxes?” you can fully deduct the home mortgage interest you pay on acquisition debt as long as the debt isn’t more than the following amounts within a tax year:

• $750,000 of mortgage debt if the loan was finalized after Dec. 15, 2017
• $1 million of mortgage debt if the loan was finalized on or before Dec. 15, 2017

These limits are halved if you’re Married Filing Separately. (Note: The lower debt limit is effective 2018 through 2025 and will revert back to $1 million after 2025 (barring legislation passing.))

You can’t deduct the interest you pay on home equity loans or home equity lines of credit if the debt is used for something other than home improvements. This includes things like using it to pay for college tuition or to pay down credit card debt.

An example: In 2020, Chris bought his main home for $500,000. A few years later, he owed $400,000 on the original mortgage and took out a $60,000 home equity loan. He used the money to build a sunroom and install an indoor pool. His home is now worth $700,000. He then took out another $130,000 home equity loan and bought a sailboat.

On his 2023 tax return, it’s better for him to itemize his deductions vs. claiming the standard deduction. That said, he can deduct the home mortgage interest he pays on:

• $400,000 left on the original mortgage (acquisition debt)
• $60,000 sunroom and pool loan (acquisition debt)

He can’t deduct any interest related to the home equity loan for the sailboat.

Splitting the home mortgage interest deduction

What if you share a mortgage with another person? How do you split the home mortgage interest deduction with your spouse? You can each split the mortgage interest you paid if the above requirements are met. If one person in a party doesn’t itemize deductions, the other can’t deduct the full amount of the mortgage interest unless they actually paid it.

Mortgage interest deduction exceptions

Here are some exceptions to the home mortgage interest deduction:

• Suppose a first or second home is used for personal and rental use. In that case, you can allocate the deduction limited to the part of the home allocated for residential living or follow the special variation home rules for the second home. Learn more about navigating income tax on rental properties.
• If part of your home is used as a home office, then that portion should be allocated as a business expense as a home office deduction, not the mortgage interest deduction.

How to claim the mortgage interest deduction

If you’re wondering how to claim the mortgage interest tax deduction, there are a few pointers to consider.

1. Itemize your taxes

As mentioned above, you claim the mortgage interest deduction only if you itemize vs. take the standard deduction when you do your taxes. You’ll use Tax Form 1040 (Schedule A) to itemize tax deductions.

2. Get your IRS Form 1098

You will get Form 1098 if you pay $600 or more mortgage interest throughout the tax year from your bank lender in late January or early February. This tax form details how much you paid in mortgage interest in a year. Your lender also sends a copy of that 1098 to the IRS. Use this form in the event of an IRS tax inquiry or audit.

Use Schedule E (1098) for rental property interest.

3. Calculate your mortgage interest deduction

You will need to calculate your deduction by figuring how much interest will qualify for the deduction. Remember the rules above for what kinds of interest payments qualify for deduction.

4. Report the deduction on Form 1040

You will report the deduction on Form 1040, Schedule A.

Navigating the mortgage interest deduction

It pays to take mortgage interest deductions, but it requires a little extra legwork to claim. If you’re looking for help claiming the mortgage interest deduction or other valuable tax deductions, H&R Block can help. Whether you make an appointment with one of our knowledgeable tax pros or choose one of our online tax filing products, you can count on H&R Block to help you with your tax preparation and get your max refund or lower what you owe in income tax.

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Wondering what might apply to you? Check out our list of common and valuable tax breaks.

What is a tax deduction?

If you’re wondering, “What are deductions on taxes” we’ll weigh in now! As briefly stated above, a tax deduction reduces the amount of income subject to taxation from the Internal Revenue Service (IRS), ultimately reducing your overall tax liability by lowering your total income tax bill.

As noted above, there are two types of tax deductions: above-the-line deductions and below-the-line or itemized deductions. We’ll give you a brief description of both as we dive in and later a side-by-side comparison.  [Insert jump link]

Deductions for taxes: A list of helpful options

From gig worker perks like the home office deduction, to retirement contributions, here’s a tax deduction list.

Above-the-line deductions:

Deductions subtracted from your gross income to calculate your adjusted gross income are known as “Above-the-line” deductions.

1. Retirement contributions and Traditional IRA deductions

If you contribute to a tax-advantaged traditional retirement account (IRA, 401(k), etc.), you may owe less tax than if you didn’t contribute. With a 401(k), you might not even realize you’re receiving an exclusion if you have your contribution automatically made in conjunction with your paycheck. The money comes out before the taxes do, resulting a reduction of your taxable income.

With a Traditional IRA, you can still get a tax deduction without requiring access to an employer plan. However, your tax break may be limited if you also participate in an employer plan. For self-employed taxpayers, SEP IRA and SIMPLE IRA contributions are “above the line” tax deductions. See the other self-employed deductions below.

2. Student loan interest deduction

Did you know you can deduct up to $2,500 of your student loan interest? This education expense deduction is “above the line,” so you don’t have to itemize in order to take advantage of it, but you need to make below a certain level of income to qualify.

3. Self-employment expenses

With working side hustles becoming more popular recently, it’s no surprise that self-employment expenses are more common. For example, if you pay for your own qualified health insurance, that may count as an “above the line” deduction. Also, you can deduct one-half of your self-employment tax above-the-line.

On top of that, you can deduct business expenses like internet costs, office supplies, advertising, and business travel from your business income. And, for qualifying individuals, you can take the home office deduction!

4. Home office tax deductions

Speaking of self-employment, if you’re self-employed and have a home office that meets IRS standards, you can take a tax write-off for it – called the home office deduction. For example, if your home office represents 4% of your home’s total square footage, you may be eligible to deduct 4% off that property’s utilities, insurance, and property taxes. Just remember there are strict rules around what constitutes a home office with “regular and exclusive use.”

5. HSA contributions

Health Savings Accounts (HSAs) are gaining in popularity as health care costs rise and as more employers seek to put more of the cost of insurance on employees. Your after-tax HSA contributions are tax-deductible. Not only does the money grow tax-free when you use it for qualified health care costs, but you can use your contributions to reduce your tax liability to boot!

6. Alimony paid

If you pay alimony, you could take an above-the-line tax deduction. Generally, alimony is not deductible if your divorce was finalized after 2018. To qualify for the alimony tax deduction:

• You must make the payment in cash, not property
• The spouse must receive the payment under a divorce or separation agreement. The agreement can’t specifically exclude the payment from being:
  • Included in the recipient’s income
  • Deducted by the payor spouse
• You can’t reside in the same household as your former spouse when the payment is made if divorced or legally separated.
• Liability for payments must end upon the death of either spouse.

7. Educator expenses

Teachers who incur out-of-pocket expenses can reduce their AGI by offering a tax deduction of up to $300 (for 2023) for qualified K-12 education items that are used for the classroom. The deduction rises to $600 (for 2023) if an educator is married to another eligible educator and filing under the status Married Filing Jointly.

Below-the-line deductions:

It is beneficial to claim below-the-line or itemized deductions if your total deductions are more than your standard deduction.

8. Charitable donations deduction

You will need to itemize your deductions if you want to deduct your charitable donations. Many people find it worth itemizing these deductions—particularly if you give regularly to a church or other charity.

It’s also possible to deduct the current fair market value of goods you donate to charity. Make sure you get a receipt for your donations, whether they are cash or goods. And don’t forget to keep track of your mileage if you drive on behalf of a charity; that’s tax-deductible, too.

9. Mortgage interest deduction

If you own a home and itemize, you can deduct the qualified interest you pay on your mortgage. It’s also possible to deduct refinancing points and other aspects of your home ownership costs, including property taxes.

10. State and local taxes

State and local taxes are a federal tax write-off. The current limit for the  SALT deduction is $10,000. State and local taxes include income, real estate, and personal property taxes.

11. Medical expense deduction

If you’re itemizing deductions, you can take a medical expenses deduction if you have unreimbursed expenses that are more than 7.5% of your Adjusted Gross Income. Learn more about the medical expense deduction.

Tax deduction examples — above & below the line

Here’s a deeper dive on the difference between above-the-line and below-the-line tax deductions.

• Above-the-line deductions: Above-the-line tax deductions, or adjustments to income, are calculated by subtracting them from your gross income to arrive at your adjusted gross income (AGI). Reducing AGI can impact other items on your return, such as taxable Social Security and eligibility for credits. You can claim these tax breaks regardless if you claim the standard deduction or itemize your deductions.
• Below-the-line deductions: Below-the-line tax deductions, also known as itemized deductions, are expenses that are deducted from your AGI to reduce your taxable income and your tax liability. These deductions are reported on Schedule A of your tax return (Form 1040). 

What doesn’t count as a tax deduction?

While there are many tax deductions that can help offset your tax bill, these (unfortunately) don’t qualify: 

• Car inspection fees
• Customs duties
• Employee business expenses (eliminated in 2017 tax law)
• Federal excise tax
• Federal income tax
• Gas tax
• License fees
• Gift tax
• Personal expenses
• Social Security, Medicare, FUTA, and RRTA taxes
• Real property improvements
• Tax paid for someone else

Remember to document!

No matter what tax deduction(s) you take, be sure to properly document them. This is especially true with self-employment expenses and with charitable donations. Keep receipts to back you up. Before you take a deduction, make sure you can prove that you are entitled to it, and consider consulting a tax professional to make sure you’re qualified for every tax credit or deduction you take on your tax return.

Get help claiming tax deductions

Understanding tax deductions is crucial if you want to maximize your potential tax refund and lower your tax bill at tax time.

Need help determining which tax credits or deductions apply to you? Whether you choose to file with a tax pro or file with H&R Block Online, we can help you navigate your taxes. We’ll help you find potential tax credits and breaks, and you can rest assured that we’ll get you the biggest tax refund possible.

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For many, the expectation that some taxes are going to come out of your pay is a given. But if you’re taking a close look at your paystub and don’t see that Uncle Sam is getting his share, you may wonder, “Why was no federal income tax withheld from my paycheck?”

The missing withholding could be due to a number of reasons, but it’s worth investigating the actual reason why. As you may know paycheck withholding is linked to covering any tax liability you may have with the Internal Revenue Service (IRS) each year—so, clearing up any tax-related missteps is in your best interest. 

While the best way to find out why there was no withholding tax deducted from your paycheck is to ask your employer, we can also help you give you a few clues.

4 reasons why you may have had no federal taxes withheld

Here are some possible reasons why your employer didn’t withhold federal taxes withheld (or even state taxes):

1. If you’re considered an independent contractor, there generally would be no federal tax withheld from your pay. Rather than completing a Form W-4 to show your withholding preferences, you likely completed a Form W-9 to show your social security or other tax ID number to your employer or client. If this is the case:
2. You probably received an IRS Form 1099-NEC instead of a W-2 to report income received. No Social Security or Medicare tax would have been withheld either.
3. You’ll need to file a Schedule C to report the income and any expenses from a business you operated, profession you practiced, or gig work you performed.
4. You’ll also need to file a Schedule SE to report and pay your self-employment tax, which consists of Social Security and Medicare taxes. Most self-employed people pay estimated tax quarterly to keep up on their tax liability.  

Want to avoid tax-time surprises? Get ahead of your independent contractor tax obligations and check out our Filing Guide to Gig Worker Taxes.

2. You might have claimed to be exempt from federal tax withholding on your IRS Form W-4. You must meet certain requirements to be exempt* from withholding and have no federal income tax withheld from your paychecks. You should check with your HR department to make sure you have the correct amount withheld.

3. Your employer might have withheld taxes but gave you an incorrect W-2. If this is true, your employer must issue you a corrected W-2.

4. Your employer might have just made a mistake. If your employer didn’t have federal tax withheld, contact them to have the correct amount withheld for the future. When you file your tax return, you’ll owe the amounts your employer should have withheld during the year as unpaid taxes. You may need a corrected Form W-2 reflecting additional FICA earnings.

*Note: Being exempt from withholding is not the same thing as withholding allowances (this went away in 2020). Learn more about what it means to be “exempt from federal withholding”.

Getting federal income tax withheld the right way

It’s no small thing to get your federal tax withholdings right. But it can also be tough to just keep up with what’s changed since the last time you’ve filled out a Form W-4. Like the fact that allowances haven’t been on the form for several years. Who knew?

Luckily, we’re here to help make getting your withholding right a lot easier. You can also use our helpful tax withholding estimator calculator to create a completed W-4 you can print out, sign, and give to your employer.

And, if you’re wondering what happened to the W-4 form and withholding allowances, get the scoop from our post: Understanding W-4 Withholding Tax Exemptions, Allowances, and Deductions.

No federal income tax withheld? Get help from Block

Hopefully we helped to explain why no federal income tax was withheld from your paycheck. But, it might be in your best interest to get tax help if there was no state or federal income tax withheld from your paycheck or if your employer did not withhold federal taxes, especially if it will affect your taxes owed or your ability to get a refund.

If you had no federal tax withheld from your paycheck and need help navigating your taxes, you can always get help from H&R Block tax pro. Plus, whether you choose to file with a tax pro or file with H&R Block Online, you can rest assured that we’ll get you the biggest refund possible.

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While the cost of college can add up, there is a potential tax deduction you can take. The student loan interest tax deduction can help make higher education expenses more affordable.

While you may be on your way to college, in college, or out, this post will discuss the student loan interest deduction. So, if you will someday or are currently making student loan interest payments to pay back what you took to finance your higher education, tune in!

Related: Check out our student tax filing guide.

Is student loan interest deductible?

If you’re wondering, “Is student loan interest deductible?” The answer is yes. In fact, federal student loan borrowers could qualify to deduct up to $2,500 of student loan interest per tax return per tax year. You can claim the student loan interest tax deduction as an adjustment to income. You don’t need to itemize deductions to claim it.

What is student loan interest?

Student loan interest is the interest you paid during the year on a qualified student loan (sometimes called a qualified education loan). Student loan interest can be found on Form 1098-E, from the lender. A tuition statement (form 1098-T) shows the tuition and scholarship information. A qualified student loan is a loan you took out only to pay qualified education expenses that were:

• For you, your spouse, or a person who was your dependent when you took out the loan
• Paid or incurred within a reasonable period of time before or after you took out the loan
• For education provided during an academic period for an eligible student

Loans from these sources aren’t considered qualified student loans:

• Related person
• Qualified employer plan

Qualified education expenses are the total costs to attend an eligible school. This includes graduate school. The costs include:

• Tuition and fees
• Room and board
• Books, supplies, and equipment
• Other necessary related expenses, like transportation

You can usually claim the student loan tax deduction if you meet all these requirements:

• Your filing status is any status except married filing separately.
• No one else is claiming you as a dependent.
• You’re legally obligated to pay interest on a qualified student loan.
• You paid interest on a qualified student loan.

If you’re Married Filing Jointly:

• You can deduct the full $2,500 if your modified adjusted gross income (AGI) is $155,000 or less.
• Your student loan deduction is gradually reduced if your modified AGI is more than $155,000 but less than $185,000.
• You can’t claim a deduction if your modified AGI is $185,000 or more.

If you’re filing as Single, Head of Household, or Qualified Surviving Spouse:

• You can claim the full $2,500 student loan deduction if your modified AGI is $75,000 or less.
• Your deduction is gradually reduced if your modified AGI is $75,000 but less than $90,000.
• You can’t claim a deduction if your modified AGI is $90,000 or more.

How the student loan interest deduction works

If you pass the qualifications above, you probably want to know how the student loan interest deduction works. Like any other tax deduction, it lowers your taxable income, and in some instances could lower your tax bracket.

This deduction is above the line, meaning it’s an adjustment to your taxable income, and you don’t have to itemize your taxes to claim it. You can subtract up to $2,500 of interest paid from your income when calculating AGI.

Where to go for more help with student loan tax deduction

To learn more specific tax information, see Chapter 4 of the Internal Revenue Service Publication 970: Tax Benefits for Higher Education at www.irs.gov. To get hands-on guidance, get help from H&R Block. At H&R Block, you can find the expertise you need. Whether you file on your own with H&R Block Online or file with a tax pro, we’ll be there with you every step of the way.

Free tax filing for students – Did you know some students can file for free with H&R Block? It’s true! Learn more who can file for free with H&R Block Free Online.

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You can claim part of your total job expenses and certain miscellaneous expenses. These expenses must be more than 2% of your adjusted gross income (AGI). Claim these deductions from taxable income on Schedule A.

Usually, these three basic categories fall under the 2% rule:

• Employee business expenses
• Tax-related expenses
• Investment-related expenses

Employee business expenses

Your employer might reimburse you for business expenses. If not, you might be able to deduct certain expenses. However, if you’re eligible for employer reimbursement but don’t put in a claim, you can’t deduct the costs.

You can deduct your ordinary and necessary business-related expenses under the 2% rule on Form 1040, Schedule A. However, they must be ordinary and necessary. These include:

• Travel
• Entertainment
• Business gifts
• Local transportation

An ordinary expense is common and accepted in your field of trade, business, or profession. A necessary expense is helpful and appropriate for your business. An expense doesn’t have to be required to be considered necessary.

Job-related expenses you can deduct under the 2% rule include:

• Automobile expenses
• Home-office expenses
• Unreimbursed travel, entertainment, and gift expenses
• Cost of special work clothes not suitable for everyday wear

To learn more, see Publication 463: Travel, Entertainment, Gift, and Car Expenses or Publication 529: Miscellaneous Deductions at www.irs.gov.

Tax-related expenses

You can deduct tax-advice costs under the 2% rule on Schedule A. These include:

• Long distance phone calls to the IRS
• Tax preparation

However, you’ll deduct the cost of tax help for:

• Your own business on Schedule C
• Rental activity on Schedule E

You should claim the remainder under tax-related expenses on Schedule A. You also might be able to deduct:

• Cost of software that tracks deductible expenses
• Taxable sales of assets and investments

If you prepare your own taxes, you can deduct these costs:

• Tax-planning and tax-preparation manuals
• Tax-preparation software
• E-filing fees
• Postage if you file a paper return
• Convenience fees charged if you paid your tax electronically using:
  • MasterCard
  • Discover
  • American Express
  • VISA

You can also deduct these tax-related amounts:

• Part of attorney’s fee that applies to tax advice
• Lawyer’s fee for securing you alimony in a divorce
• Lawyer’s fee and court-filing fees for court cases against the IRS over a tax issue

To learn more, see Publication 529: Miscellaneous Deductions at www.irs.gov.

Investment-related expenses

You can deduct certain fees and other expenses for managing investments. The investments must produce taxable income. You’ll deduct the fees and expenses under the 2% limitation rule.

These include the cost of:

• Safe-deposit box rental for storage of taxable securities
• Investment books, magazines, and newsletters bought for investment advice
• Computer software or online services used in connection with taxable investment activities
• Computers used in whole or in part for investment purposes claimed as depreciation
• Investment counseling and management

You can’t include the cost of attending investment seminars or meetings.

To learn more, see Publication 550: Investment Income and Expenses at www.irs.gov.

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The difference between the standard deduction vs. itemized deduction comes down to simple math. The standard deduction lowers your income by one fixed amount. On the other hand, itemized deductions are made up of a list of eligible expenses. You can claim whichever deduction reduces your tax bill the most. You are not allowed to claim both.

Read on to better understand the difference between the two terms.

Standard deduction

What is a standard deduction? While we covered the basics above, let’s get more specific. The standard tax deduction is a fixed dollar amount that reduces the income you’re taxed on and is the most common type of deduction taxpayers take. The standard deduction:

• Allows you to take a tax deduction even if you have no expenses that qualify for claiming itemized deductions
• Eliminates the need for itemizing deductions
• Allows you to avoid keeping records and receipts of your expenses in case of a tax audit

The standard deduction amount varies according to your filing status. Here are the amounts for tax year 2023:

• For single or married filing separately — $13,850
• For married filing jointly or qualifying widow(er) — $27,700
• For head of household — $20,800

You’ll have a higher standard deduction if you’re blind or 65 or older:

• For Single – $15,700
• For Head of Household – $22,650
• For Married Filing Jointly or Qualifying Widowers – $29,200

What is an itemized deduction and how does it work?

Itemized deductions also reduce your Adjusted Gross Income (AGI), but work differently than the standard deduction. As the name implies, the standard deduction is a standard (or fixed) amount. In contrast, the itemized deduction is a dollar-for-dollar deduction that differs from taxpayer to taxpayer. The itemized deduction amount is determined by adding all applicable deductions and subtracting the sum from your taxable income. Common itemized deductions include:

• Casualty and theft losses from a federally declared disaster
• Charitable donations
• Deduction for state and local taxes
• Gambling loss deduction (only to extent of gambling winnings reported on your tax return)
• Home mortgage interest
• Unreimbursed medical and dental expenses (AGI threshold is 7.5%), including health insurance premiums paid with after-tax income

How do you decide which deduction to claim?

So, which one’s best for you? Really it comes down to the amount that is the most. First, calculate your itemized deductions. You might be able to claim some itemized deductions on your state return even if you can’t claim them on your federal return. You will need IRS Form 1040 – Schedule A: Itemized Deductions to determine the amount of your itemized deduction.

Then, compare the itemized deduction amount to the standard deduction (based on your filing status). If the amount of your itemized deduction exceeds the standard deduction, then you will claim itemized deductions on your tax return.

Standard vs. itemized deduction example using 2023 amounts

If you’re a taxpayer filing as Single and your AGI is $40,000 with itemized deductions of $14,000, then your taxable income is reduced to $26,000. If you elected to use the standard deduction, you would only reduce your AGI by $13,850, making your taxable income $26,150. In this example, you should opt to take itemized deductions.

When to itemize vs. take the standard deduction?

In some situations, itemizing makes more sense. Here are some common situations:

• You have itemized deductions totaling more than the standard deduction you would receive.
• You incurred significant out-of-pocket unreimbursed medical and dental expenses within the tax year.
• You paid real estate taxes and home mortgage interest on your home (See more about deducted mortgage interest and Form 1098).
• You had large, uninsured casualty (fire, flood, wind) or theft losses from a federally declared disaster.
• You have large gambling losses (and enough gambling winnings to offset those losses)
• You made substantial charitable contributions.
• You had other allowable deductions such as impairment-related work expenses of a disabled person or repayment of amounts subject to a claim of right over $3,000.

Standard deduction vs. itemized deductions – state tax considerations

There’s another situation where you may want to itemize deductions even if your total itemized deductions are less than your standard deduction: If you’d pay less tax overall between your federal and state taxes.

This can happen if you itemize on your federal and state returns and get a larger tax benefit than you would if you claimed the standard deduction on your federal and state returns. Residents of some states, like Michigan (which does not allow a standard deduction for most taxpayers) or Massachusetts (which doesn’t allow standard deductions) should consider this.

Get help claiming itemized or standard deductions

Need help deciding whether claim itemized vs. standard deduction this tax season? Whether you choose to file with a tax pro or file with H&R Block Online, we can help you navigate your taxes. Plus, you can rest assured that we’ll get you the biggest refund possible by finding potential tax breaks and credits..

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Under previous tax laws, you could deduct approved costs associated with moving household goods and personal items, along with the travel costs of moving to the new home (excluding meals) if you qualified.

The Tax Cuts and Jobs Act of 2017 eliminated the deduction for moving expenses for most taxpayers between 2018 and 2025, except certain members of the Armed Forces and their families. Then, it reverts to previous tax law. (Check back with us for details at a later date!)

Moving expenses tax deduction – current requirements

So, what are the current rules?  For tax years after 2018, you can deduct moving expenses on your federal tax return if you’re in the military and are:

1. Active-duty military member, and you permanently move to a new base pursuant to a military order
2. The dependent or spouse of a military member who moves to a new base
3. The spouse or dependent of a military member that died, was imprisoned or deserted

Moving expenses tax deduction – previous requirements

Trying to remember the old rules? Prior to passing the Tax Cuts and Jobs Act (TCJA), you could qualify for the moving expense deduction if:

• Your employer didn’t pay or reimburse the moving costs and exclude the payment or reimbursement from your income.
• Your new work location was a certain distance from your former home.
• You worked a minimum amount of time in the first one or two years after your move, depending on your employment status. (Special rules applied to members of the armed services.)

In 2025, when the TCJA law expires, the law could revert to former requirements.

What moving expenses are deductible now?

As mentioned above, you can still claim the moving expense deduction if you or your spouse is a member of the military on active duty who moves pursuant to a military order. But you won’t be able to claim just anything as a moving expense. Allowable expenses are anything that is reasonable for the circumstances of your move of personal affects and goods, like:

• Temporary storage
• Packing and crating of personal items
• Traveling expenses (including lodging) to your new home

Unfortunately, you can’t deduct any expenses for meals, or any moving expenses covered by reimbursements from the government (or paid for directly by the government) excluded from your income.

You can calculate moving expenses on IRS Form 3903. Then, on IRS Form 1040 you can deduct the sum of total moving expenses.

View more guidance on military moving expenses.

Looking for tax help?

Tax laws frequently change, so it’s important to stay informed or consult someone who can. If you’re looking for personal guidance, make an appointment with your nearest H&R Block tax professional.

Whether you work virtually, drop your taxes off at an office, or work with a tax pro at one of our offices, we can help you file taxes with ease and accuracy.

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What is a 529 plan?

A 529 plan is a type of account that features certain tax benefits and is especially designed for saving for and paying for college and other qualified higher education. Think of it as a Roth IRA or mutual fund of sorts. The difference between common individual savings plans and 529s is that the plan fund exclusively is used for educational expenses.

Examples include apprenticeship programs, vocational schools, and other postsecondary learning institutions eligible to participate in the federal student aid program administered by the United States Department of Education. Plus, coverage includes elementary or secondary private schools (think K-12 tuition), religious schools, and even student loan repayments – advancing the opportunity to leverage tax savings in other areas.

Are 529 contributions tax deductible?

If college is in your or your loved ones’ futures, you’re probably wondering if 529 contributions tax are deductible. And for a good reason: It’s essential to understand what you can deduct when you direct plan funds!

In short, 529 contributions are not tax deductible on the federal level. However, some states consider contributions tax deductible. (Defer to your state treasurer for more info!)

Plus, 529 plans offer other tax benefits. Earnings from the direct plans aren’t subject to federal income tax and generally not subject to state income tax when used for qualified education expenses. In essence, the earnings on your contributions can grow tax-free over time.

As you review your 529 plan options, be sure to check the deductibility rules for your state.

529 college savings plans: Distributions and recontributions

When it’s time to take money out of your 529 to pay for higher education expenses (called a distribution or withdrawal), you’ll want to understand the tax implications.

First, any earnings withdrawn are excluded from a student’s taxable income. In addition, some states allow contributions to be excluded from your state tax bill.

The Internal Revenue Code states the taxation of 529 depends on how you use it. Below, we’ll define and expound on distributions and recontributions.

Unqualified distributions:

Because 529s are built to be used for certain college expenses, a 10% penalty will apply to the earnings portion if you take the money out for other purposes. (This is on top of the normal tax on the earnings.) That said, it’s important to know what expenses meet the rules and which don’t.  If the expenses meet the rules, the distribution is considered qualified. 

Qualified distributions:

When you take funds out of your 529 Plan, you won’t need to pay federal or state taxes on the distribution as long as you use the withdrawal for qualified education expenses. In addition, you don’t incur a tax penalty if you use the funds right away for an acceptable expense.(For some people, you might take a distribution that is partially taxable only if a part of it is used on qualifying expenses.)

What are 529 qualified expenses?

529 qualified higher education expenses generally include:

• Books
• Computer technology or equipment
• Fees
• Room and board
• Tuition plans

A word of caution for those claiming the American Opportunity Tax Credit (AOTC): You can claim this credit the same year that you have a 529 distribution. But, here’s what you need to watch out for: You can’t use the same expenses for the AOTC that you’ve paid for with your 529 money. For example, if you paid tuition with your 529, you wouldn’t use that expense to claim the AOTC. Long story short, there’s a rule against double dipping using the same expenses for the AOTC & 529 money.

Have other related tax filing questions? Make sure to visit our Tax Guide for College Students and reference other college student tax credits.

Recontributions:

With 529 plans, you might come across the term “recontributions.” It’s when your school issues a refund for expenses paid with a 529 plan, and you recontribute it back to the plan (to the same beneficiary) within 60 days to avoid paying taxes or incurring a tax penalty. The PATH Act of 2015 added a special rule for the recontribution of 529 refunds.

What else should you know about recontributions?

When you put the refunded money back into your plan, it must be equal to or less than the refund amount. If you put back more than what you originally contributed, it’s considered a new contribution. Also, because recontributions part of your principal, they don’t count towards your plan’s maximum contribution. 

How do I report 529 withdrawals?

Do you need to report 529 activity on your taxes each year? The short answer: it depends.

Scenario 1: If you’re not withdrawing from your account, you don’t need to report it on your income taxes.

Scenario 2: If you take a 529 distribution, the 529 plan administrator will send Form 1099-Q by Jan. 31 the next year. Suppose the funds were used on a qualified education expense or rolled over to another 529 plan. In that case, you don’t need to report anything on your taxes. But, if you take a distribution and use it for an unqualified expense, it counts as a taxable withdrawal. It will be subject to federal (and sometimes state) taxes.

Get expert tax guidance on 529 plans today

With a bit of planning, you can use educational savings plans to pay for school smarter (like avoiding excessive student loans) and offset taxes.

To review your own options, learn about all the ways to file with H&R Block. For state income tax guidance – like finding out if there’s a state tax deduction for 529 contributions – learn more about our state tax filing software.

You could also reach out to a financial advisor for personalized guidance in building a unique college investing plan.

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If you’re wondering if health insurance premiums can be deducted, the answer is no. You are already receiving the tax benefit with your pre-taxed earnings, and you can only claim qualified medical expenses as a post-tax deduction if they were paid for with after-tax earnings.

Can you deduct medical expenses in all cases?

After-tax medical expenses can be deducted if you itemize your tax return, but not if you take the standard deduction. To itemize your medical expenses, you should complete Form 1040, Schedule A: Itemized Deductions.

According to the Internal Revenue Service (IRS), a medical expense can include payment for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatment affecting any structure or function of the body. Learn more about the details of deducting medical expenses on taxes. If you’re itemizing deductions, the IRS generally allows you a medical expenses deduction if you have unreimbursed expenses that are more than 10% of your Adjusted Gross Income,

Get help with pre- and post-tax health insurance deductions

Understanding if health insurance is a pre-tax deduction (or post-tax deduction) can be tricky. If you still have questions about what can be deducted from your taxes, our tax pros can help. They are committed to helping you better understand your taxes — and how to maximize your tax savings.

For more information on qualified medical expenses, visit Topic 502: Medical and Dental Expenses at https://www.irs.gov/taxtopics/tc502.html.

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