Should I itemize on my tax return, or take the standard deduction?

If you want to save on your taxes, you should take the biggest deductions you can. Most people take the standard deduction, unless itemizing deductions will give them a larger tax break. Before you just follow the math, however, you should be aware that there are a few situations in which it might be worth it not to go with the obvious decision when filing your tax return.

Running the numbers

The first step in figuring out the right answer for you is to look up how much you could take for the standard deduction this year. For 2016 returns, you’ll find the appropriate numbers below.

Filing Status

Standard Deduction for 2016 Tax Year

SINGLE $6,300
Married filing jointly $12,600
Head of household $9,300
Married filing separately $6,300

Source: IRS.

However, those numbers are just a starting point. If you’re 65 or older or you’re blind, then you can get a higher standard deduction. For most taxpayers, add $1,550 to the number above if one condition applies, or $3,100 if both apply. Married couples who file jointly get a standard deduction boost of $1,250 for each condition that applies to either spouse. So if both spouses are blind and 65 or older, then the increase in the standard deduction would be at its maximum at $5,000.

Many people like the standard deduction because it’s easy. Itemized deductions require work, and you have to look at some of the following items to see whether the total would get you a bigger tax break:

  • Interest you pay on a mortgage
  • Money you give to charity
  • Payments for state and local taxes
  • Expenses for medical and dental services, subject to a minimum threshold of between 7.5% to 10% of your adjusted gross income
  • Losses from casualties or theft, to the extent they’re greater than $100
  • What you pay toward certain miscellaneous expenses, but only by the amount that they exceed 2% of your adjusted gross income

If itemizing gets you a bigger deduction than the standard deduction, then it usually makes sense to itemize. If the standard deduction is larger, then just use it.

 

You can read the other half of this article on USA Today here: http://usat.ly/2lK7BFp

2017-02-23T18:34:31+00:00

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