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A family opportunity mortgage is a loan for a residential property bought for a parent or an adult disabled child who could not qualify for financing on their own.

Under Fannie Mae guidelines, a principal residence can be purchased for a child or parent who is unable to work or who does not have sufficient income to qualify for a mortgage. The buyer will be considered the owner-occupant even though they will not live in the house.

This article will explain family opportunity mortgage guidelines and rules, how to find lenders, and more.

Note: SoFi does not offer family opportunity mortgage loans at this time. However, SoFi does offer other conventional mortgage loan options.

What Is a Family Opportunity Mortgage?

What was a formally titled program under Fannie Mae is now a conventional loan with expanded guidelines to allow owner-occupied financing under special circumstances.

A family opportunity mortgage may be used:

•   When parents or legal guardians of a disabled adult child want to provide housing for the child.

•   When children want to provide housing for parents who cannot qualify for a mortgage because they cannot work or their income is too low.

Buyers are able to obtain financing at the same interest rates and terms as a principal residence under these circumstances. They do not have to use second home or investment property requirements.

Recommended: How to Buy a Single-Family Home

How a Family Opportunity Mortgage Works

A family opportunity mortgage works just as a conventional mortgage for your primary residence does. Buyers must meet Fannie Mae’s eligibility and underwriting standards in order to qualify for the loan.

Lenders consider your debt-to-income (DTI) ratio, monthly debts as a percentage of your gross monthly income. Fannie Mae guidelines call for a maximum 45% DTI, or 50% with certain compensating factors.

Your income, though, must be high enough to cover the home mortgage loan for your primary residence and the residence you want to buy for your parent or dependent child. A credit score of at least 620 and steady employment will be required to qualify for the new mortgage as well.

Example of a Family Opportunity Mortgage

Here’s an example where you could use the family opportunity mortgage. Let’s say you have elderly parents who need more care, and you would like for them to move near you. Their retirement income isn’t enough to qualify for a mortgage in your area.

If you have enough income and a decent credit score, you may be able to buy a house for them. This is where a family opportunity mortgage may make sense.

You’ll turn to your lender to qualify you for owner financing. The term “family opportunity mortgage” is, technically, no longer in use, but the ability to qualify for an owner-occupied mortgage for a disabled adult child or elderly parent following Fannie Mae guidelines is the same. The lender can help you explore different types of mortgages that will meet Fannie Mae’s criteria.

You’ll need to choose between a fixed-rate loan and an adjustable-rate mortgage.

After settling on a mortgage product, you’ll submit all the necessary documents through your lender to apply for the mortgage.

After the loan closes, your parents will move into the house, and you’ll make the mortgage payments in your name.

Keep in mind the mortgage and the deed will be in your name unless you add your parents to the deed. There are advantages and disadvantages to structuring it this way, so be sure to do some research or consult a lawyer.

Recommended: Home Loan Help Center

Steps to Qualify for a Family Opportunity Mortgage

If you want to qualify for an owner-occupied mortgage for a disabled adult child or elderly parent, you’ll need to take the following steps:

•   Complete a mortgage application with your lender. You’ll need to add the amount of the additional mortgage to the one you have on your principal residence (if any) and still have enough income to qualify for financing. Take a look at this mortgage calculator tool if you want help coming up with an estimate.

•   Obtain preapproval. By providing a specific tentative loan amount, mortgage preapproval allows you to look for homes that fall within your budget.

•   Find a suitable property. The property does not have to be outside a specific distance from your own home (what’s known as “distance rules”); nor do you have to reside in the property to qualify for owner-occupied financing. The types of houses may be restricted to single-family homes, but it may also be up to your lender.

•   Provide your lender with all necessary documentation. This may include proof of the adult child’s disability or proof that a parent is unable to take on a mortgage.

•   Close on the loan. Sign all the paperwork, wire your down payment and closing costs to the appropriate entity, and take care of any final details.

A family opportunity loan is usually treated like conventional financing for an owner-occupied home. Some lenders may have stricter lending standards when it comes to the definition of an owner-occupied residence.

Advantages of a Family Opportunity Mortgage

Being able to provide housing for a loved one with owner-occupied financing comes with some advantages:

•   Lower down payment requirement. With a family opportunity mortgage, the minimum down payment is usually 5% (0% if borrowers qualify for a USDA or VA loan). If the property is bought as a second home or investment, the down payment requirement is usually 15% or more.

•   Interest rates are lower. Loan rates for second homes or investment properties run higher than owner-occupied residential mortgage rates.

•   Lower property taxes. When a property is classified as owner-occupied by your local taxing authority, you may qualify for an exemption that reduces property taxes owed.

•   Mortgage interest and property tax may be tax deductible. When you file your taxes, you may be able to claim the mortgage interest and property tax dedication for both properties. Consult a tax advisor about this deduction.

•   Borrowers are not required to occupy the property. With a family opportunity mortgage, you are not required to live on the property to qualify for owner-occupied financing.

Which Lenders Offer Family Opportunity Mortgages?

Since the official program with the name “Family Opportunity Mortgage” has been discontinued, you won’t be looking for a lender that offers this program when you are shopping for a mortgage. Instead, you’ll be looking for a lender that allows you to use Fannie Mae’s definition of an owner-occupant when buying a house for a parent or disabled adult child. Many lenders will offer this as it is a common conventional loan.

Tax Implications of a Family Opportunity Mortgage

The tax implications of owning a home with a type of family opportunity mortgage may be complex. It’s a good idea to consult a tax attorney or tax accountant for advice.

Dream Home Quiz

The Takeaway

Buying a home for a disabled adult child or an aging parent is possible if you meet Fannie Mae guidelines and have sufficient income. If you’re looking for the family opportunity mortgage, ask lenders if they allow owner-occupied conventional financing if you purchase a home for parents or a disabled adult child. You’ll save money while providing housing to a vulnerable adult.

FAQ

Has the Family Opportunity Mortgage program been discontinued?

The formal name “Family Opportunity Mortgage” has been discontinued, but Fannie Mae still allows conventional mortgages to be considered owner-occupied for buyers who are purchasing a home for a disabled adult child or for parents who cannot qualify for mortgages on their own.

Can I buy a home for someone who is not my family member?

You can buy a single-family home for someone who is not a family member, but the circumstances do not meet Fannie Mae family opportunity mortgage guidelines and will not qualify for owner-occupied financing.

Photo credit: iStock/Ridofranz

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q125-033

Before signing your closing documents and walking away with the keys to your new home, it’s important to reexamine the final details of the mortgage. Your lender is required to provide this information ahead of closing in the form of a mortgage closing disclosure.

Paperwork fatigue aside, the closing disclosure deserves careful review, as it outlines the mortgage terms and conditions you’re agreeing to.

What Is a Closing Disclosure?

You may have weighed the different mortgage types and then homed in on one that suited you best.

Maybe you got mortgage preapproval before zeroing in on a property you couldn’t live without (for a while, at least). Now the deal is almost buttoned up.

Here comes the closing disclosure, a five-page form from your lender outlining the home mortgage loans terms, including the loan principal, interest rate, and estimated monthly payment. It also lays out how much money is owed for closing costs and the down payment.

Lenders are required by federal law to provide the mortgage closing disclosure at least three business days ahead of the closing date.

Recommended: Understanding Mortgage Basics

Why the Closing Disclosure Is Important

The mortgage closing disclosure contains all the final terms of your home loan, like how much you pay each month and over the life of the loan. You probably had many mortgage questions for your lender, but all the conditions of your loan, such as your ability to refinance or pay off the loan early, are detailed here.

These specifics can have a significant impact on your personal finances. Just one percentage point difference in the interest rate can cost you thousands in the long run.

When you receive the closing disclosure from your lender, this is a final chance to review the fine print and compare everything with the loan estimate, the three-page document with the loan amount, interest rate, and other key information provided by your lender after you applied for a mortgage.

You may have obtained multiple loan estimates when shopping for a mortgage, but you’ll only get a closing disclosure from the lender you chose to finance with.

Recommended: Mortgage Help Center

What’s in the Closing Disclosure?

Visual learners, rejoice: The U.S. government’s Consumer Financial Protection Bureau maintains a sample closing disclosure with an accompanying checklist and tips on how to read a closing disclosure.

Here’s a breakdown of the components in the closing disclosure.

Loan Terms

The terms include the loan amount, interest rate, and the monthly principal and interest you’ll pay. This section notes if the loan has a prepayment penalty for paying off the mortgage early (a rarity these days) or a balloon payment, a one-time fee due at the end of the loan (ditto).

The closing disclosure will note with a “yes” or “no” whether the amount for any of these items can increase after closing.

Projected Payments

This section shows the factors used for the payment calculation, including the principal and interest, any mortgage insurance, and estimated escrow to pay property taxes, homeowners insurance, and any flood insurance. These add up to estimated total monthly payment for the mortgage.

If you don’t use an escrow account, the bottom of this section will show the monthly costs for property taxes, homeowners insurance, and homeowners association (HOA) dues, if applicable.

Checking these numbers against the original loan estimate from your lender is good practice.

Costs at Closing

Top of mind for many borrowers is the amount of cash needed to close. Usually, you can expect closing costs to be 2% to 5% of the home purchase price.

This section identifies the “cash to close,” which represents the closing costs plus the down payment owed by the borrower.

Loan Costs

Flipping to Page 2, this section provides a summary of expenses associated with taking out the loan. The costs consist of the origination fee, application fee, underwriting fee, and mortgage points if you’ve chosen to purchase any.

Additional costs are categorized under “services borrower did not shop for” and “services borrower did shop for.” The former includes services arranged by the lender, like the appraisal fee, while the latter refers to services the borrower had a choice in procuring, such as the title search and pest inspection fee.

Other Costs

There are other costs that may be due at signing, such as taxes and government fees, prepaids, escrow payments, and HOA fees.

Ensure that each amount is accurate and correctly entered as either borrow-paid or seller-paid.

Calculating Cash to Close

The table in this section shows a side-by-side comparison between the loan estimate and final dollar amount needed to close.

The calculation will account for any deposits paid by the borrower and seller credits negotiated as part of the deal.

Summaries of Transactions

This section provides a detailed look at what the borrower and seller are paying at closing. Costs prepaid by the seller, such as property taxes and HOA fees, may be adjusted to show what portion is owed by the borrower.

Loan Disclosures

Your mortgage comes with conditions, which are outlined on Page 4 of the closing disclosure. You’ll see which apply based on the box that’s checked for each.

Loan Calculations

On the final page, there are loan calculations showing the total amount you’ll pay over the life of the loan, as well as the finance charge, amount financed, annual percentage rate, and total interest percentage.

If you’re just looking into home loans, a mortgage calculator can estimate your monthly payments and total interest paid over the loan term.

Other Disclosures

The lender must disclose other characteristics of the mortgage, if applicable. They include the appraisal, contract details, liability after foreclosure, ability to refinance, and tax deductions.

Contact Information

Refer to this section if you need to contact the lender, brokers, or settlement agent involved with your mortgage.

Confirm Receipt

Signing the mortgage closing disclosure indicates that you received the form, not that you agree to the terms and accept the loan.

What Is the Three-Day Waiting Period?

As of 2015, the Consumer Financial Protection Bureau’s “Know Before You Owe” mortgage rule requires lenders to provide the mortgage closing disclosure at least three business days before closing.

This aims to give borrowers plenty of time to review the final loan terms, ask their lender any clarifying questions, and prevent unexpected costs at closing.

There are a few scenarios that could change the closing disclosure timeline. Your lender must provide another closing disclosure, thus granting three more days, if one of the following issues occurs:

•  A change in the loan APR (one-eighth of a percentage point or more for a fixed-rate loan or one-quarter of a percentage point for an adjustable-rate mortgage)

•  Addition of a prepayment penalty

•  A change in the loan product

How to Check Your Closing Disclosure

All five pages of the closing disclosure contain key information for the borrower to review. It may be helpful to go line by line with your loan estimate in hand to compare the final terms against what the lender previously provided.

Here are a few important items to pay attention to:

•  Review your name and the property information.

•  Check that the loan description and amount match the loan estimate.

•  Make sure that the interest rate is unchanged if you locked it.

•  Ensure you understand all the fees and any changes to them.

What Can and Can’t Change on the Closing Disclosure

There are some costs that can’t be changed on the closing disclosure, while others may increase by a certain percentage or by any amount.

Unless there’s a change in circumstances on the loan, changes can’t be made to the following:

•  Transfer taxes

•  Fees paid to the lender for a required service

•  Fees paid for a required service that the borrower wasn’t allowed to shop separately for

Recording fees and costs for required services from a lender’s written list of providers may not increase by more than 10%.

There are other costs that can change by any amount at any time, including:

•  Prepaid interest, property insurance premiums, or initial escrow deposits

•  Fees for required services by the lender that the borrower shopped separately for

•  Fees for optional third-party services

•  Note that your interest rate can fluctuate if it’s not locked or due to changes on your mortgage application.

What to Do if There’s an Error on the Closing Disclosure

It’s important to notify your lender or settlement agent of any errors on the closing disclosure.

Redoing the closing disclosure could delay the closing and affect your interest rate if your mortgage rate lock expires.

The Takeaway

The mortgage closing disclosure gives a detailed overview of your loan terms and closing costs. Review it promptly with your loan estimate at hand. If you’re uncertain of any information, reach out to your lender to go over the closing disclosure as soon as possible.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

Does a closing disclosure mean I’m approved?

The loan is approved before you receive the closing disclosure, but a significant change to your credit, income, or debt before closing could affect your approval.

Can you waive the three-day closing disclosure?

You can waive the three-day closing disclosure in the case of a personal financial emergency, such as losing the home if the mortgage doesn’t close in time.

How long after the closing disclosure do you close?

You can close three business days at the earliest after receiving the closing disclosure. Errors on the closing disclosure could delay the process.

Can you be denied after the closing disclosure?

Yes. A dramatic change in your personal finances could cause a lender to reject your mortgage. It’s a good idea to try to avoid changing jobs or taking on new debt near the end zone.

Photo credit: iStock/Khosrork

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q125-025

If you’re expecting a refund from the IRS, you shouldn’t have to wait too long for your money. According to the IRS, it issues most refunds within three weeks of receiving your filing. Key to receiving your refund quickly are two actions on your part: using e-file and providing your bank info for direct deposit.

In fact, a directly deposited refund can show up in less than 21 days.

This table shows the estimated times for receiving an IRS tax refund depending on how you file and choose to get your refund:

What Money Will Be Included In My Tax Refund This Year?

Of course, the size of your refund depends on how much you overpaid. But the average refund for individuals in 2024 was $2,850. That figure is up slightly from 2023, when the average tax refund was $2,753.

To get your refund faster, you may want to file earlier, rather than waiting until the last minute. Typically, the tax season, when the IRS starts accepting and processing returns, starts in late January.

When your refund does arrive, an online budget planner can help you keep track of where your money is going.

Reasons for Your Tax Refund to be Delayed

People typically receive their tax refund two weeks after the IRS accepts their tax filing if they opt to receive a direct deposit, or in three weeks if they choose to get a check in the mail. But if you’re still waiting after that point and wondering where your tax refund is, here are a few possible reasons for the delay:

•   If anything in your return is incomplete or incorrect, the IRS may need to give the return further review before sending you a refund check. In this case, you may get a notice from the IRS in the mail with instructions for fixing or completing your tax return. It may take up to four months for the IRS to process returns that require extra handling. The sooner you respond to the IRS request for information, the sooner your return will be processed.

•   If you are claiming the Earned Income Tax Credit or Additional Child Tax Credit, there may be a delay in receiving your tax refund. The IRS is required to hold any tax returns for people claiming those two tax credits until mid-February. This hold will show up in the “Where’s My Refund” tool on the IRS site if it applies to you.

•   Your bank or credit union may take more time to post a refund to your account. The time for posting IRS refunds varies from institution to institution.

Recommended: IRS Tax Refund Dates and Deadlines

How to Use the ‘Where’s my Refund’ Tool on the IRS Site

The IRS has a “Where’s My Refund” tool on irs.gov where anyone can check and see the status of their tax refund. It can also be accessed using the IRS2Go mobile app. If you submit your tax return electronically, you can easily check on the status of your refund online within 24 hours of filing. If you mail your tax return, it will take about a month or longer for any information about refunds to show up on the IRS site.

In order to access your refund information on the IRS website, you will need to input your social security number, tax filing status, and the dollar amount that you expect to receive on the return. Double check your information before submitting it: If the wrong social security number is entered, this could result in an error, extra identity verification steps, and even a delay in receiving your tax refund.

What Do the IRS Tax Return Statuses Mean?

There are three different IRS tax return statuses that you will see when you use the Where’s My Refund tool. Here’s what they mean:

Received

Once the IRS has received a return, it is marked as received. You can check to see if your return has been received using the “Where’s My Refund” tool on the IRS site.

Approved

Once the IRS processes a tax return and there are no errors or missing information, it is marked as approved. At that point, the process of sending a refund by mail or direct deposit can begin.

Sent

When the IRS mails out a refund check or sends a direct deposit refund, the tax return status is marked as “sent.”

How to Contact the IRS About Your Tax Refund

It’s best to wait at least 21 days after filing your return electronically, and six weeks after mailing your return, to contact the IRS by phone. At that point, you can call the IRS refund hotline at 800-829-1954.

Recommended: 41 Things to Do With Your Tax Refund

The Takeaway

Knowing when you’ll receive your tax refund can be helpful if you’re planning to use the money to pay off debt, create a budget, or save for a big purchase. Filing your return electronically and opting to get your refund via direct deposit will allow you to get your return quickly, typically within three weeks. A money tracker app can help you manage your finances, including your refund, and track your spending and savings.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

How quickly will I get my refund?

Most refunds are sent within three weeks of the IRS receiving a tax filing, but it can sometimes take longer, especially if you mail your return or opt to get your refund by check through the mail.

It’s been longer than 21 days since the IRS received my return and I haven’t gotten my refund. Why?

Sometimes the IRS needs to manually review tax returns if they are incomplete, have errors, or if fraud is suspected. Also, if a taxpayer claims certain tax credits, such as the Earned Income Credit or Additional Child Tax Credit, his or her return may take longer to process.

Will calling help me get my refund any faster?

Calling may help you track where your refund is, but it won’t necessarily help you get it faster. Wait at least 21 days after filing your return electronically, and six weeks after mailing your return to contact the IRS by phone. You can call the IRS refund hotline at 800-829-1954.

Photo credit: iStock/rez-art

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.


Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q125-001

Tax deductions enable taxpayers to reduce their total taxable income. That can be a very good thing: It can result in a lower tax bill or, if you had too much withheld through the year, a larger refund.

While most people now take the standard deduction — especially since the Tax Cuts and Jobs Act of 2017 effectively doubled the standard deduction amount — some taxpayers may benefit from itemizing their deductions.

Doing so can be a somewhat complicated and time-consuming process, but it may save you money. Here’s your guide to itemizing deductions; read on to learn:

•  What is an itemized deduction?

•  How do itemized deductions differ from standard deductions?

•  What are examples of itemized deductions?

•  What are the pros and cons of itemizing deductions?

What Is an Itemized Deduction?

Itemized deductions are a strategy to lower your adjusted gross income for a tax year. Rather than taking a set standard deduction whose amount is determined by the Internal Revenue Service (IRS), some taxpayers choose to calculate all deductions for which they’re eligible. They can then decrease their taxable income by that amount.

It’s worthwhile for some taxpayers to do the math and see how much they can reduce their tax bill by itemizing. That said, many may realize they can actually reduce their taxable income more by taking the standard deduction. Why? The standard deduction is much larger than it used to be since the passing of the Tax Cuts and Jobs Act at the end of 2017.

For the 2024 tax year (filing in 2025), the standard deduction is:

•  $14,600 for single tax filers ($15,000 for tax year 2025)

•  $21,900 for heads of household ($22,500 for tax year 2025)

•  $29,200 for married couples filing jointly ($30,000 for tax year 2025)

Almost everyone can take the standard deduction — and there’s a lot less math and paperwork involved. But for a unique set of taxpayers, itemized deductions could yield an even larger tax liability reduction than what the IRS offers through the standard deduction.

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Itemized vs. Standard Deduction: What’s the Difference?

So what are the differences between itemized deductions and the standard deduction? Let’s take a look.

•  Dollar amount: The standard deduction is a set amount. If you choose the standard deduction, you cannot reduce your tax liability further by tacking on itemized deductions. When itemizing, the amount by which you reduce your tax burden varies depending on your unique tax situation. In nearly every case, it only makes sense to itemize if the resulting deduction is larger than the standard deduction or if you aren’t eligible to take the standard deduction.

•  Process: Claiming the standard deduction is straightforward. You don’t need to produce receipts and sort through expenses. If you itemize, you’ll need to educate yourself about all the deductions for which you qualify, produce the proof that you qualify in case of a tax audit, and fill out what is known as Schedule A on your tax return.

•  Eligibility: Anyone can itemize their deductions, but the standard deduction has a few exceptions. For example, if you’re married but filing separately and your spouse itemizes, you must itemize as well. While almost everyone is eligible to take the standard deduction, it never hurts to check with the IRS or your accountant to ensure eligibility.

Recommended: How to Pay Less Taxes: 9 Simple Steps

How Do Itemized Deductions Work?

Now that you know what itemized deductions vs. standard ones are, consider a more specific example of how they work.

Itemized deductions reduce your overall tax liability, just like the standard deduction. The catch? You can only take the itemized deductions for which you’re eligible. If you can cobble together enough itemized deductions to equal a larger tax-liability reduction than the standard amount, it could be worth itemizing.

As an example, let’s assume your gross income was $100,000.

•  The standard deduction for this income for tax year 2024 is $14,600 for single filers, so your taxable income would be $85,400.

•  Let’s suppose your itemized deductions are worth $20,000. It will lower your taxable income to $80,000.

Because your itemized deductions are greater than the standard deduction, it makes sense to itemize. Doing so will lower your taxable income and can thereby reduce the taxes you pay.

While it may take longer to calculate your deductions and prepare your tax return, it may make good financial sense to keep that extra cash in your pocket (or savings account, as the case may be).

Types of Itemized Deductions

The IRS offers an extensive list of potential itemized tax deductions, but you’ll probably only qualify for a handful. Here are a few of the most common:

•  Property tax deduction

•  Mortgage interest deduction

•  Charitable contribution deduction

•  Deduction of state and local sales taxes

•  Deduction of certain medical and dental expenses

While the IRS used to have a long list of miscellaneous deductions — from moving expenses to unreimbursed job expenses to tax preparation fees — many of these disappeared with the Tax Cuts and Jobs Act.

Independent contractors may want to consider itemizing; check out the tax deductions for freelancers to see which ones you may qualify for. As you itemize your business expenses, pay attention to the home office tax deduction, as well as how much you spend on office supplies, travel, and other business-related expenses. Make sure to keep good documentation of what you’ve paid.

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How to Claim an Itemized Deduction

To claim itemized tax deductions on your return, you’ll need to fill out IRS Schedule A with your Form 1040. Here’s what that process looks like:

1.   Research itemized deductions. It’s helpful to know which deductions you qualify for — and to gather up necessary documentation to enter in all the information beforehand. Preparing for tax season can make the process go much more smoothly!

2.   Fill out Schedule A. You’ll enter in all your expenses and add them up to get your total deduction.

3.   Compare it to the standard deduction. Before copying that total over to your Form 1040, it’s wise to reference the standard deduction for your filing status this year. Once you’re sure that the itemized deduction can yield larger savings, you can write down the number on Form 1040 and continue filing your taxes.

While the process sounds straightforward, it can be difficult to find out which deductions you’re eligible for and how to tabulate all your expenses. If you’re unsure, it may be a good idea to work with an accountant or at least professional tax preparation software.

Recommended: How to File Taxes for the First Time

Pros and Cons of Itemized Deductions

So what are the benefits and drawbacks of itemizing your deductions? Let’s take a look.

Pro: Itemizing could help lower your taxable income and save you more money than the standard deduction.
Con: Given changes to tax law a few years back, there’s a good chance you may save more with the standard deduction.
Pro: Because you’re writing off certain expenses and know which expenses are deductible, you may be more prudent with your spending habits throughout the year.
Con: Itemizing can involve a lot more paperwork and effort. It can be confusing, and you must make sure you’re only itemizing deductions for which you actually qualify to avoid trouble with the IRS.

The Takeaway

Most people will likely save more money on their taxes with the standard deduction, but depending on your scenario, you could see a greater reduction in your tax liability by itemizing. If you have the time, it may be worth it to go through the process of itemizing, just to see if you could save money. If you can, great! And if not, the standard deduction also offers great savings.

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FAQ

Can anyone itemize a deduction?

All taxpayers are permitted to itemize deductions, but the Tax Cuts and Jobs Act has made it less attractive to itemize for many Americans. Why? The standard deduction essentially doubled in size, while fewer expenses became eligible for itemizing.

Still, it may be worth calculating your itemized deductions to see if you can save more than you would with the standard deduction.

What are some things that you cannot itemize?

Since the Tax Cuts and Jobs Act, there are fewer things that you can itemize on your tax return. Even some popular deductions that people used to take are no longer eligible, including moving expenses, tax preparation fees, and unreimbursed business expenses.

Many deductions have a lot of fine print — both for inclusion and exclusion — so it’s a good idea to work with an accountant or professional tax preparation software to determine what counts as an itemized deduction.

Do you need proof for itemized deductions?

Generally, you should have proof for expenses that you are claiming as an itemized deduction. Such documentation would prove that you paid the expenses and that they were eligible for the deduction. The IRS calls this the burden of proof.

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SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Eligible Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.


External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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