RSS FeedStandard Deduction vs. Itemizing
Which one is better for you? First of all you need to understand the difference between the two. Unfortunately we do all have to file taxes. But we have the ability to file as accurately as we can to produce an end result that is in our better interest. To do this you need to have a solid understanding of basic tax filing methods, including the difference between the standard deductions and itemizing your deductions. Although you can still list your itemized deductions if you have your taxes prepared for you, it is an absolute must if you do your taxes yourself. First let’s look at the differences.
If you take the standard deduction amount, then you are accepting a flat amount to be deducted from you taxable income. This isn’t the same thing as exemptions, which you should be able to get where you itemize or take the standard deduction. Instead of taking the standard deduction, you can also choose to claim your actual deductions by itemizing. If your expenses are greater than the standard deduction amount, this will save you money on your return.
Decide if you should take the standard deduction or itemize by using Schedule A, which is included with the long version of Form 1040. This allows you to list all of your allowable expenses. Compare this total to the total of the standard deduction. (the standard deduction will vary depending on your filing status) If your allowable expenses are greater than the standard deduction, you certainly want to itemize.
While the list of allowable deductions has gotten smaller, making itemizing your deductions harder, mortgage interest continues to be the major allowable deduction for most. This certainly should make the list and chances are it is high enough that it alone puts your over the standard deduction allowing you to itemize.
Aside from mortgage interest there are still some main items that are still allowed to be claimed as a deduction. State and local income taxes can be considered. Also state and local personal property taxes based on the value of personal property such as cars or boats can be added. Even medical expenses (If they exceed 7.5% of your Adjusted Gross Income). Remember, also, that any charitable contribution can be itemized as well.
There may be other items that you can list on your taxes. This is one way of getting better results from your tax return. If you do your taxes yourself, you should still visit with a tax preparation professional that may know you personally. He or she may have other advice that could positively affect the outcome of your overall tax return.