Itemizing vs. Standard Deduction: Six Tips to Help You Choose

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When you file your tax return, you usually have a choice whether to itemize deductions or take the standard deduction. Before you choose, it’s a good idea to figure your deductions using both methods. Then choose the one that allows you to pay the lower amount of tax. The one that results in the higher deduction amount often gives you the most benefit. Here are six tips to help you choose!

Calculate your itemized deductions.  Add up deductible expenses you paid during the year. These may include expenses such as:

  •  Home mortgage interest
  •  State and local income taxes or sales taxes (but not both)
  •  Real estate and personal property taxes
  •  Gifts to charities
  •  Casualty or theft losses
  •  Unreimbursed medical expenses
  •  Unreimbursed employee business expenses

Special rules and limits apply. Visit IRS.gov and refer to  Publication 17, Your Federal Income Tax for more details.

Know your standard deduction.  If you don’t itemize, your basic standard deduction for 2017 depends on your filing status:

  •  Single $6,350
  •  Married Filing Jointly $12,700
  •  Head of Household $9,350
  •  Married Filing Separately $6,350
  •  Qualifying Widow(er) $12,700

Your standard deduction is higher if you’re 65 or older or blind. If someone can claim you as a dependent, that can limit the amount of your deduction.

Check the exceptions.  Some people don’t qualify for the standard deduction and therefore should itemize. This includes married couples who file separate returns and one spouse itemizes.

Use the IRS’s ITA tool.  Visit IRS.gov and use the Interactive Tax Assistant tool to help determine your standard deduction.

File the right forms.  To itemize your deductions, use Form 1040 and  Schedule A, Itemized Deductions. You can take the standard deduction on Forms 1040, 1040A or 1040EZ.

Consult a certified tax specialist. The policies and procedures used by the IRS to determine what is deductible are constantly changing. An experienced tax specialist knows the rules, understands tax law and has the most current information about what deduction options may be available.

William D. Truax and his friendly team of Enrolled Agents (EAs) and licensed tax preparers have been helping individuals and businesses address tax debt and compliancy issues for over 30 years. He is licensed to represent taxpayers before the IRS and is also a member of the Bar of the United States Tax Court.

If you need assistance or have questions about which deduction option might work best for your situation, please contact us today for a FREE consultation. We’re here to help!