TurboTax / Tax Calculators & Tips / All Tax Guides / Tax Deductions and Credits / Video: What Are Tax Deductions?

Video: What Are Tax Deductions?

Updated for Tax Year 2015


Tax deductions reduce the amount of tax you owe by allowing you to subtract certain expenses from your income.

Hi, I'm Jeremy from TurboTax, with important news for tax payers.

Tax deductions reduce the amount of tax you owe by allowing you to subtract certain expenses from your income. By effectively lowering your taxable income, deductions reduce the amount of tax you owe. Typically, you must itemize your deductions to receive the full benefit. The alternative is to take the standard deduction offered by the IRS. If your total deductible expenses for the year are more than the standard deduction amount then you will save more by itemizing.

There are certain types of deductions you can take regardless of whether you are eligible to itemize or not. These expenses are reported separately from standard and itemized deductions. They include college tuition payments for yourself and other dependents, alimony payments to a former spouse and even your moving expenses if you relocate for a new job. For those of you who can itemize deductions, there are many expenses you an include that are not available to those who claim a standard deduction.

When it's time for you to prepare your tax return, keep in mind that the government allows you to deduct some common expenses such as mortgage interests and property taxes for your home, donations made to charity and medical and dental expenses. There are others that are not quite as common and often overlooked like the cost of looking for work or traveling to an interview when non-employed. The more expenses you have that are eligible for deduction, the smaller your tax bill will be and if you have amounts withheld from your check for income taxes, they can increase the amount of your refund check.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99*
Start for Free

Looking for more information?

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.

Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • Filing Deadline: IRS filing deadline for tax year 2015 is April 18, 2016 (except for residents of Massachusetts or Maine, where the IRS filing deadline for tax year 2015 is April 19, 2016).
  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Free 1040EZ/A + Free State offer only available with TurboTax Federal Free Edition; Offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase expected 3/18/16. Special discount offers may not be valid for mobile in-app purchases.
  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for efiling state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase expected 3/18/16. Prices subject to change without notice.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with efile and direct deposit; tax refund timeframes will vary.
  • Pay for TurboTax out of your federal refund: A $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except the TurboTax Home & Business/QuickBooks Self-Employed bundle offers.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice service is available via phone for your toughest tax questions; fees may apply. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2014 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.