Getting Your Financial Ducks In A Row

Should I Itemize or Use The Standard Deduction?

Taxes
Taxes (Photo credit: Tax Credits)

As you prepare your tax return, you have a decision to make about your tax deductions – you can choose between itemizing and using the standard deduction.  But how do you choose?

The Standard Deduction is just what it sounds like – a standardized deduction that you can choose to utilize by default, and you don’t have to do a lot of recordkeeping through the year in order to use the the standard deduction.  In order to itemize deductions, you need to save receipts from various deductible expenses through the year, and use those to prepare your itemized return.

Oftentimes it is a foregone conclusion, once you understand the differences between itemizing and the standard deduction.

Standard Deduction vs. Itemizing: Facts to Help You Choose

Each year, millions of taxpayers choose whether to take the standard deduction or to itemize their deductions.  The following seven facts from the IRS can help you choose the method that gives you the lowest tax.

  1. Qualifying expenses – Whether to itemize deductions on your tax return depends on how much your spent on certain expenses last year.  If the total amount you spent on qualifying medical care, mortgage interest, taxes, and charitable contributions is more than your standard deduction, you can usually benefit by itemizing.
  2. Standard Deduction amounts– Your standard deduction is based on your filing status and is subject to inflation adjustments each year.  For the 2018 tax year, the amounts are:
    • Single, $12,000
    • Married Filing Jointly, $24,000
    • Head of Household, $18,000
    • Married Filing Separately, $12,000
    • Qualifying Widow(er), $24,000
  3. Some taxpayers have different standard deductions – The standard deduction amount depends upon your filing status, whether you are 65 or older or blind and whether another taxpayer can claim an exemption for you.  If any of these apply, use the Standard Deduction Worksheet in the 1040 instructions.
  4. Married Filing Separately – When a married couple files separate returns and one spouse itemizes deductions, the other spouse cannot claim the standard deduction and therefore must itemize to claim their allowable deductions.
  5. Some taxpayers are not eligible for the standard deduction – These taxpayers include nonresident aliens, dual-status aliens and individuals who file returns for periods of less than 12 months due to a change in accounting periods.
  6. Forms to use – The standard deduction can be taken on your Form 1040. To itemize your deductions, use Schedule A, Itemized Deductions.
Exit mobile version