What you claim on your tax return falls into four buckets: your filing status, all the income you received, the adjustments and deductions that shrink your taxable income, and the credits that cut your tax bill directly. For returns filed in 2026, the standard deduction alone shelters $15,000 for single filers and $30,000 for married couples filing jointly, so a large share of income is already protected before you look at anything else.1Internal Revenue Service. Rev. Proc. 2024-40 Everything else you claim either lowers the taxable amount further or reduces the tax itself.
Start With Your Filing Status
Filing status sets your standard deduction, your bracket thresholds, and your eligibility for several credits, so it drives every other number on the return. The IRS recognizes five:2Internal Revenue Service. Filing Status
- Single: unmarried with no dependent who qualifies you for head of household.
- Married filing jointly: one return combining both spouses’ income and deductions. Usually the lowest tax for couples.
- Married filing separately: each spouse files their own return. Occasionally saves money but disqualifies you from several credits.
- Head of household: unmarried and paying more than half the cost of keeping up a home for yourself and a qualifying dependent. The standard deduction is $22,500.
- Qualifying surviving spouse: available for two years after a spouse’s death if you have a dependent child, with the same standard deduction and brackets as married filing jointly.
The wrong choice cascades. An unmarried parent who files single instead of head of household leaves $7,500 in standard deduction on the table.1Internal Revenue Service. Rev. Proc. 2024-40
Income You Have to Report
The IRS expects nearly every dollar that came in during the year. Wages and salary from a W-2 job are the starting point. Tips and bonuses count too, even if your employer didn’t put them on a formal earnings statement.3Internal Revenue Service. Tip Recordkeeping and Reporting
Investment income belongs on the return: interest from bank accounts, stock dividends, and capital gains from selling property or securities.4Internal Revenue Service. Unearned Income Unemployment benefits are taxable at the federal level, which catches many people off guard during a job gap.5Internal Revenue Service. Unemployment Compensation
Freelance and gig income deserves extra attention. Money earned through ride-sharing apps, online freelance platforms, delivery services, and independent consulting is taxable whether or not you receive a 1099.6Internal Revenue Service. Gig Economy Tax Center The IRS cross-references payment platform records, and skipping this income is one of the fastest ways to trigger a notice.
Not every deposit is taxable. Gifts, most life insurance payouts, and inheritances are generally excluded. The line is whether the money is compensation for work, a return on an investment, or something the tax code specifically exempts.
Adjustments You Can Claim Before Deductions
Before you decide between the standard deduction and itemizing, you can subtract certain expenses directly from gross income to reach your adjusted gross income. These “above-the-line” adjustments are available whether or not you itemize, which makes them especially valuable.7Office of the Law Revision Counsel. 26 U.S.C. 62 – Adjusted Gross Income Defined A lower AGI also improves your eligibility for credits and deductions that phase out at higher income levels.
- Student loan interest, up to $2,500 in interest paid on qualified education loans, with a phase-out at higher incomes.8Internal Revenue Service. Topic No. 456, Student Loan Interest Deduction
- Educator expenses, up to $300 in unreimbursed classroom spending on supplies, books, and equipment for eligible K–12 teachers.9Internal Revenue Service. Topic No. 458, Educator Expense Deduction
- Traditional IRA contributions, limited to $7,000 for 2025 returns and $7,500 for the 2026 tax year, with a catch-up amount for filers 50 and older.10Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
- Health Savings Account contributions made with after-tax dollars, up to $4,400 for self-only coverage and $8,750 for family coverage in 2026, plus an extra $1,000 for those 55 and older.
- Half of self-employment tax if you work for yourself, deducting the employer-equivalent share of Social Security and Medicare.11Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
Standard Deduction or Itemize
After AGI, you subtract either the standard deduction or the total of your itemized expenses, whichever is larger. For the 2025 tax year filed in 2026, the standard amounts are:1Internal Revenue Service. Rev. Proc. 2024-40
- Single or married filing separately: $15,000
- Married filing jointly or qualifying surviving spouse: $30,000
- Head of household: $22,500
Roughly 90% of filers take the standard deduction because it’s simpler and often larger than the alternative. Itemizing pays off when your deductible expenses exceed the standard amount, which usually means homeowners with large mortgage interest, residents of high-tax states, and anyone with major medical bills or substantial charitable giving. Run the numbers both ways if you’re close.
What to Claim If You Itemize
Itemized deductions go on Schedule A. Four categories cover most filers.
State and Local Taxes
You can deduct state and local income taxes, or sales taxes if that’s higher, along with property taxes. Under recent legislation, the combined cap rose to $40,000 for most filers, up from $10,000. The higher cap phases down for filers with modified AGI above $500,000. Married couples filing separately face a $20,000 cap.
Mortgage Interest
Interest on a home mortgage is deductible on up to $750,000 of loan principal, or $375,000 if married filing separately. Mortgages that predate December 16, 2017, keep the older $1 million limit.12Internal Revenue Service. Publication 936 (2025), Home Mortgage Interest Deduction
Medical and Dental Expenses
Unreimbursed medical and dental costs are deductible only for the portion above 7.5% of your AGI. On an $80,000 AGI, you’d need more than $6,000 in qualifying expenses before any deduction kicks in.13Internal Revenue Service. Publication 502 (2025), Medical and Dental Expenses Most people don’t clear the threshold in an ordinary year.
Charitable Contributions
Donations to qualified nonprofits are deductible when you itemize. Cash contributions are generally deductible up to 60% of AGI, and donations of appreciated property follow a lower limit. Keep receipts, and get a written acknowledgment from the charity for any single gift of $250 or more.
Credits That Reduce Your Tax Bill Directly
Credits are more powerful than deductions because they reduce the tax itself, not the taxable income. A $1,000 deduction saves you $220 in the 22% bracket. A $1,000 credit saves you $1,000 regardless of bracket.
Child Tax Credit
The Child Tax Credit is worth up to $2,200 for each qualifying child under age 17. If your tax liability is too low to absorb the full amount, up to $1,700 per child may be refundable through the Additional Child Tax Credit, meaning the IRS pays you the difference. You need earned income of at least $2,500 to qualify for the refundable portion.14Internal Revenue Service. Child Tax Credit
Earned Income Tax Credit
The EITC is for low- and moderate-income workers and is fully refundable. The amount depends on your earnings, filing status, and number of qualifying children. For the 2025 tax year:15Internal Revenue Service. Earned Income and Earned Income Tax Credit (EITC) Tables
- No children: maximum credit of $649 (AGI limit $19,104 single, $26,214 joint).
- One child: maximum credit of $4,328 (AGI limit $50,434 single, $57,554 joint).
- Two children: maximum credit of $7,152 (AGI limit $57,310 single, $64,430 joint).
- Three or more children: maximum credit of $8,046 (AGI limit $61,555 single, $68,675 joint).
The EITC is one of the most commonly missed credits, particularly among workers without children who don’t realize they qualify. Check the tables if your income lands anywhere near these ranges.
American Opportunity Tax Credit
The AOTC covers up to $2,500 per eligible student for qualified tuition and education expenses during the first four years of college. Forty percent (up to $1,000) is refundable. The full credit requires modified AGI of $80,000 or less, or $160,000 for joint filers, and phases out entirely above $90,000 single or $180,000 joint.16Internal Revenue Service. American Opportunity Tax Credit
Refundable and Non-Refundable
The difference matters. A non-refundable credit can zero out your tax bill but won’t generate a refund on its own. A refundable credit pays you the excess. If you owe $500 and claim a $2,000 refundable credit, you get a $1,500 refund; a non-refundable credit stops giving you value once your tax hits zero. The EITC and part of the AOTC are refundable. Many others, including the child and dependent care credit, are not.
Documents That Back Up What You Claim
Gathering paperwork before you sit down prevents the most common errors. At minimum:
- Social Security numbers for yourself, your spouse if filing jointly, and every dependent you claim.
- W-2 forms from every employer you worked for during the year.
- 1099 forms for freelance income (1099-NEC), bank interest (1099-INT), dividends (1099-DIV), investment sales (1099-B), and other non-wage income.17Internal Revenue Service. Gather Your Documents
- 1098 forms for mortgage interest and 1098-E for student loan interest.
- Receipts and records for medical expenses, charitable donations, business expenses, and anything else you plan to deduct.
Employers and financial institutions are required to send these forms by late January. If something is missing, contact the issuer directly rather than guessing. The IRS receives copies of every W-2 and 1099, so discrepancies between your return and their records get flagged automatically.
Fixing a Claim You Got Wrong
If you realize after filing that you forgot income, missed a deduction, or chose the wrong filing status, you correct it with Form 1040-X. The IRS catches and fixes some math errors automatically, but substantive changes like adding a credit or reporting additional income require you to file the amendment yourself.18Internal Revenue Service. Should I File an Amended Return?
You generally have three years from the date you filed the original return, or two years from the date you paid the tax, whichever is later, to file an amended return and claim a refund.19Internal Revenue Service. Time You Can Claim a Credit or Refund Miss that window and any money the IRS owes you is forfeited, even if the mistake is obvious. If you discover you owe more tax, file the amendment as soon as possible to keep interest and penalties from growing.