Why doesn’t my refund increase when I enter a deduction?
If your refund doesn’t budge after you enter your charitable contributions, mortgage interest, real estate taxes, or whatever, you’re probably using the standard deduction.
Under the standard deduction, a fixed-dollar amount is taken off your taxable income. For example, a young married couple filing jointly gets $12,600 knocked off their 2015 taxable federal income (i.e., that’s $12,600 they don’t have to pay taxes on).
Unless the tax deductions you enter total up to more than your fixed standard deduction amount, you won’t see any changes in your refund.
But the second they do (for example, after entering a large medical expense) we’ll automatically tip you over to the itemized deduction so you can get a bigger tax break. Once that happens, you should start seeing changes in your refund as you enter more deductions.
Also, don’t confuse a deduction with a dollar-for-dollar credit. If you donate $300 to charity, don’t expect your refund to go up $300, even if you’re itemizing – that’s not how deductions work. Instead, your taxable income will be reduced by $300 (provided you’re itemizing) and you won’t pay tax on that $300.