I paid a collections loan in 2023, it was mentioned it can be written off in taxes, how does this happen?

What kind of collections?  Most loans cannot be deducted on your tax return.

If it was a medical collections bill, then yes, you would be able to claim it as an itemized expense subject to the 7.5% threshold. 

Itemized expenses include mortgage interest, state and local taxes up to $10,000, medical expenses in excess of 7.5% of your AGI and casualty and losses in excess of 10% of you AGI with the first $100 not counting towards the loss.  Your health insurance and all medical expenses are only deductible for the amount that is over 7.5% of your AGI.  This means if your AGI is $50,000, then the amount that is over $3,750 is deductible.  

Then your total itemized expenses would need to be greater than your standard deduction below in order to benefit from your insurance premium payments. 

The 2023 Standard Deductions are as follows:

• Married Filing Joint (MFJ)              $27,700
• Married Filing Separate (MFS)      $13,850
• Head of Household (HOH)             $20,800 
• Single                                                     $13,850                                

Blind and MFJ or MFS add $1,500

Single or HOH if blind add $1,850

If you paid Student Loan interest, that would also be able to be entered on your return as a 1098-E.

To enter your Student Loan interest select the following:

• Deductions and Credits
• Show more next to Education
• Student Loan Interest Paid (Form 1098-E)
• Then enter your student loan interest paid

Student loan interest will lower your taxable income and is a deduction you can take even when you choose to take the standard deduction. 

If it was a different type of bill please respond back.