Adjustments, Deductions, Exemptions and Credits
Before the government starts calculating you income tax, they allow everyone to deduct a certain amount first (they do recognize you need to eat before you pay taxes). This “deduction” really consists of 3 different pieces: adjustments, deductions, and exemptions (although most people tend to lump them together as “deductions”).
Every taxpayer gets a "standard deduction” based on his filing status. A single person gets a “Standard” deduction of $12,000 and a married couple get a Standard deduction of $24,000.
Taxpayers who have certain types of personal expenses (mortgage interest, state & local taxes, medical expenses, and charitable gifts being the most common) may itemize expenses and if the total is more than the standard deduction, they may take those “Itemized” deductions instead of (not in addition to) the standard deduction.
TurboTax (TT) automatically assigns you the standard deduction, until you enter enough itemized deductions, to exceed $12,000 ($24,000 married). So, you will not see any change on the "Refund Meter" until you have entered more than $12,000 total deductions.
Then there is adjustments to income. These are some times called “above the line” deductions because they are deducted in addition to the standard deduction, not instead of. Some common ones are IRA contributions, Alimony paid, teacher expenses, student loan interest and self employment taxes. You will see the refund meter change, when you enter adjustments.
You may have heard of another deduction called an "exemption". Exemptions were eliminated starting in tax year 2018. Everybody used to get an “exemption” of $4000. This was per person, hence the term “personal exemption”. Each taxpayer got an exemption for himself and for each dependent he claimed on his tax return. The elimination of exemptions was accompanied by larger standard deductions, starting in 2018.
Then there are tax Credits, which are deductions from your actual tax, not your income. Then there are Refundable credits, which the government will give you even if you have no calculated tax to deduct them from!
