What’s Tax Deductible? A Guide to Mortgage Interest, Long-Term Care, Funeral Expenses, Student Loans, and Roth IRA Contributions

As the tax filing deadline approaches, many individuals and families are left wondering what expenses are tax-deductible and what aren’t. From mortgage interest and medical expenses to funeral costs and student loans, the rules can be complex and confusing. In this article, we’ll cover the basics of what expenses are tax-deductible and what records you’ll need to keep to support your claims.

Key Takeaways

• Mortgage interest deduction: You can usually deduct the interest on a mortgage for your primary home or second home, but there are some limits on the amount of debt and how you use the loan.
• Long-term care insurance: Premiums for long-term care insurance may be tax-deductible if they meet certain requirements, such as being used to pay for long-term care services.
• Funeral expenses: Most individuals cannot deduct funeral expenses on their tax return, but estates that are subject to tax may be able to claim a deduction.
• Student loans: You can deduct interest on student loans, but there are income limits and other requirements that apply.
• Roth IRA contributions: Contributions to a Roth IRA are not tax-deductible, but the funds grow tax-free and can be withdrawn tax-free in retirement.

Is Home Mortgage Interest Tax Deductible?

The mortgage interest deduction is one of the most popular tax deductions available to homeowners, though it’s essential to understand the rules to ensure you’re taking advantage of this valuable tax break.

To qualify for the mortgage interest deduction, the loan must meet the following requirements:

• The loan must be secured by your primary residence or second home.
• The loan must be used to buy, build, or substantially improve the home.
• The total amount of debt on the mortgage (including any home equity debt) cannot exceed $1 million ($500,000 if you’re married and filing separately) for tax years prior to 2018.
• The total amount of debt on the mortgage (including any home equity debt) cannot exceed $750,000 ($375,000 if you’re married and filing separately) for tax years 2018 and later.

Additionally, you can only deduct the interest on the loan that is allocable to the primary residence or second home. If you use the loan for other purposes, such as to pay off credit card debt or finance a vacation, you cannot deduct that portion of the interest.

Is Long-Term Care Insurance Tax Deductible?

Long-term care insurance premiums may be tax-deductible if they meet certain requirements. To qualify, the premiums must be paid to cover long-term care services, such as:

• Assisted living or nursing home care
• In-home care services
• Adult day care services
• Respite care services

To qualify for the deduction, you’ll need to itemize your medical expenses on Schedule A (Form 1040). Like other medical expense deductions, you can only deduct what exceeds  7.5% of your adjusted gross income (AGI). For tax year 2024, this means that if your AGI is $50,000 or less, you can only deduct medical expenses that exceed $3,750.

Are Funeral Expenses Tax Deductible?

Generally, funeral expenses are not tax-deductible on your personal income tax return. However, there is an exception for estates that are subject to tax. If you’re the executor of an estate, you may be able to claim a deduction for funeral expenses on Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. To qualify, the funeral expenses must be paid with the estate’s funds.

Are Student Loans Tax Deductible?

The interest on student loans may be tax-deductible, but there are income limits and other requirements that apply. To claim this deduction, all of the following must apply: 

• In 2024 you paid interest on a qualified student loan. 
• You are legally required to pay interest on a qualified student loan. If someone else, such as a parent or grandparent, paid the interest on your behalf, you cannot deduct it. 
• Your filing status is not “married filing separately.”
• Your MAGI is less than a specified amount.* 
• If filing jointly, neither you nor your spouse can be claimed as dependents on another person’s tax return.

* For 2024, the amount of your student loan interest deduction is gradually phased out if your MAGI is between $80,000 and $95,000 ($165,000 and $195,000 if you file a joint return). You can’t claim the deduction if your MAGI is $95,000 or more ($195,000 or more if you file a joint return).

Is a Roth IRA Contribution Tax Deductible?

Contributions to a Roth IRA are not tax-deductible, but the funds grow tax-free and can be withdrawn tax-free in retirement or earlier under certain circumstances. This can be a great way to save for retirement, especially if you’re self-employed or not covered by an employer-sponsored retirement plan.

File with TurboTax for an Easy Tax Experience

As you can see, determining what expenses are tax-deductible can be complex and depends on various factors, including the type of expense, your income level, and how you use the funds. To ensure you’re taking advantage of all the tax breaks available to you, it’s essential to keep accurate records and consult with a tax professional if you’re unsure.

With TurboTax, you can file your taxes with confidence and accuracy. Let TurboTax  guide you through the tax-filing process, asking you simple questions and filling out the right forms for you. Plus, our team of tax experts is available to help you with any questions you may have.

File your taxes today and take advantage of all the tax breaks available to you!