SubscribeFirst, I need to explain that I’ve already heard the definition of a tax deduction- "A reduction of total income before the amount of income tax payable is calculated." (So please don’t reply with just a simple definition) What I need to know is how that affects my return. I’ve asked a lot of people and no one can give me a clear answer. I have student loans out and I need to know how (and how much) it would benefit me to claim a deduction based on the interest I paid on them last year. Will the deductions increase the amount of my return or are deductions only necessary if I think I will owe the IRS money? I’m really confused to please answer in simple layman’s terms. Pleaaaaaaaaaase, for my sanity- only answer if you really know what you’re talking about! Thanks 
Okay, let’s see if I can answer this concisely.
Yes, a deduction "reduces total income." Let’s say you made $30,000 but you paid $5,000 in deductible interest.
That means that of your pay, only 25,000 should have been taxable, and teh amount you paid for the income above that is returned to you.
However, its not super straight forward. There is something called the "standard deduction" which is sort of an "automatic" deduction that everyone gets. The more dependants you have, the higher the deduction. You only want to "itemize" your deudctions (IE, claim the interest) if your interest is HIGHER than the standard deduction.
Try going on http://www.turbotax.com. It takes maybe a half hour and you can input everything one at a time. The cool thing is that if you input anything that increases your refund, you see this little ticker up on the top left hand side that shows you the change. So you’ll know instantly if itemizing the deducitons are worth your while.
If you WOULD have owed the IRS, the deduction can reduce the amount. If you’re supposed to get a return, the deduction can INCREASE the return.