Filing with H&R Block - why are they asking me to pay $35 to itemize deductions?

This is actually a common situation with tax software. What's happening is H&R Block has analyzed your information and believes you would benefit more from itemizing your deductions instead of taking the standard deduction. The standard deduction is a flat amount ($13,850 for single filers in 2023) that reduces your taxable income. Itemizing means listing out specific expenses like mortgage interest, medical expenses, charitable donations, etc. If these add up to more than the standard deduction, you save more money. The free version doesn't support itemizing, which is why they're suggesting the upgrade. Before paying, I'd recommend checking what exactly is making up that $1,408 difference. Click on their explanation or tax summary to see what deductions they think you qualify for. Sometimes it's legitimate, but other times the software might be overestimating based on preliminary information.

Had the EXACT same issue last month! I was using H&R free version and got that popup saying I could get $970 more by paying $35 for their deluxe version to itemize. I was skeptical so I tried https://taxr.ai first - basically uploaded my tax docs and it analyzed everything. The tool confirmed I actually DID have enough deductions to itemize (mostly medical expenses and mortgage interest) and predicted almost the same higher refund amount H&R was showing. So I ended up switching to FreeTaxUSA instead of paying H&R, since FreeTaxUSA lets you itemize for free. Saved me the $35 and still got all the extra money!

Just wanted to follow up - I ended up checking out that taxr.ai site mentioned above and it was actually super helpful! I uploaded my mortgage statements, medical receipts, and donation records, and it confirmed I had about $16,700 in potential itemized deductions (I'm single filing). Since that was nearly $3,000 above the standard deduction, I went with FreeTaxUSA like suggested and itemized there for free. My refund ended up being $1,278 higher than if I'd taken the standard deduction! H&R Block was telling the truth about the higher refund but not about needing to pay for it. Saved myself the $35 and still got the bigger refund!

I see everyone suggesting alternatives but honestly sometimes it's just easier to call the IRS directly and ask them about this stuff. I've been trying to get through to them for THREE DAYS about a similar issue. Their hold times are ridiculous! I finally found this service called https://claimyr.com that got me through to an actual IRS agent in about 15 minutes (there's a video showing how it works: https://youtu.be/_kiP6q8DX5c). The agent explained that itemizing only makes sense if your eligible expenses exceed the standard deduction amount, and told me what specific forms I needed. Way more helpful than guessing which tax service to use. If you're really unsure about this itemizing thing, might be worth getting the official answer straight from them.

I'm eating my words from yesterday. After my snarky comment, I was stuck on hold with the IRS for TWO HOURS this morning trying to ask about an amended return issue. Out of desperation I tried that Claimyr service. Within 20 minutes I was talking to an actual IRS rep who answered all my questions and even helped me understand why my amended return was taking so long to process. I hate to admit when I'm wrong but... it actually worked exactly as promised. Saved me from wasting an entire day on hold. Sometimes being a skeptic means you miss out on solutions that actually work. 🤷‍♀️

Honestly OP just google "standard deduction vs itemized" and learn the basics. It's worth knowing since this will come up every year. Basically: Standard deduction: Easy flat amount everyone gets ($13,850 if you're single) Itemized deduction: Adding up specific expenses like: - Mortgage interest - Medical expenses (above 7.5% of income) - State/local taxes paid (limited to $10k) - Charitable donations - Etc. If your itemized stuff adds up to MORE than standard, then itemize. If not, take standard. It's that simple. H&R is probably right about you benefiting from itemizing, but wrong about you needing to pay them to do it. FreeTaxUSA, CreditKarma Tax, or even the IRS Free File options all let you itemize for free.

Has anyone tried using the IRS's own free file options? I'm wondering if those let you itemize for free too. The commercial options all seem to have some kind of catch.

I went through this exact same situation last year! H&R Block kept pushing their $35 upgrade on me too. What I learned is that they're technically correct about the potential savings, but you definitely don't need to pay them for it. Here's what I'd recommend: First, gather up all your tax documents - mortgage interest statement (1098), medical bills, charitable donations, property tax records, etc. Then add them up yourself to see if they exceed the standard deduction ($13,850 if you're single, $27,700 if married filing jointly). If your itemized deductions are legitimately higher than the standard amount, then yes, you should itemize. But don't pay H&R Block for it! I switched to FreeTaxUSA mid-process last year and saved the upgrade fee while still getting the higher refund. Their interface is actually cleaner than H&R Block's too. The key thing to remember is that H&R Block's "free" version is really just a marketing tool to get you to upgrade. Other services like FreeTaxUSA, TaxAct, and the IRS Free File options include itemizing in their actual free versions.