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

 

When filing a tax return, we all have to decide whether to itemize our deductions or take the standard deduction. The standard deduction is easiest for most of us. It doesn’t require the mind numbing task of tallying receipts or the continued burden of recordkeeping like it’s opposite –  itemized deductions.

To help decide what’s best for you and your pockets, Big Brother IRS has offered up the following as guidance.

Figure your itemized deductions.  Add up the cost of items you paid for during the year that you might be able to deduct. Expenses could include home mortgage interest, state income taxes or sales taxes (but not both), real estate and personal property taxes, and gifts to charities. They may also include large casualty or theft losses or large medical and dental expenses that insurance did not cover. Unreimbursed employee business expenses may also be deductible.

Know your standard deduction.  If you do not itemize, your basic standard deduction amount depends on your filing status. For 2013, the basic amounts are:

   • Single = $5,950
   • Married Filing Jointly = $11,900
   • Head of Household = $8,700
   • Married Filing Separately = $5,950
   • Qualifying Widow(er) = $11,900

Apply other rules in some cases. Your standard deduction is higher if you are 65 or older or blind. Other rules apply if someone else can claim you as a dependent on his or her tax return. To figure your standard deduction in these cases, use the worksheet in the instructions for Form 1040.

Check for the exceptions.  Some people do not qualify for the standard deduction and should itemize. This includes married people who file a separate return and their spouse itemizes deductions. See the Form 1040 instructions for the rules about who may not claim a standard deduction.

Choose the best method.  Compare your itemized and standard deduction amounts. You should file using the method with the larger amount.

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.

Not all tax returns are created equal and should not be treated as such.  Take a little time to figure out which option works best for you.

 

 

 

 

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