Hello everyone,
Another frequently asked tax question: should you take the standard deduction or the itemized deduction on your income tax return?
The answer is: make the choice that will maximize the tax benefit for your particular situation. The standard deduction is something everyone is entitled to take, and depends on your filing status. For example, if you are single, you are entitled to $6,300 in standard deduction (which lowers your taxable income). If itemizing the deductions will get you more tax benefit, then you should itemize!
Itemized deductions go on Schedule A, and includes items like:
- Charitable contributions
- Mortgage interest
- Property Taxes
- Medical and Dental expenses
- Work-related Travel expenses
- Theft and Casualty (Fire, Flood, Wind) related expenses
If you feel that you had many expenses in the above categories, it might be wise to itemize. But keep in mind that there are income phase-outs for certain itemized deductions (meaning that at specific income thresholds, you do not get the full tax benefits for itemizing).
According to the Internal Revenue Service, about 2 out of 3 taxpayers choose the standard deduction. Obviously, you should choose the standard deduction if you have no expenses that qualify as deductible (on the itemized Schedule A). However, some people also just like the fact that standard deduction eliminates the need to keep all the receipts and records in case you are audited by the IRS regarding itemized deductions.
If you are interested in the fine-print Tax Code, see IRS Publication 505: Tax Withholding and Estimated Tax.
If you are not sure about something, as always, I am here to help. Feel free to reply with your questions and I will guide you in the right direction. Thanks for reading!
If you found this article helpful, please check out my previous posts below:
Tax Education Series #8: Child Support vs. Alimony, and Why it Matters!
Tax Education Series #7: Top Tax Tips to Save Money
Tax Education Series #6: Tax Benefits for Students
Tax Education Series #5: Do you need to file an income tax return every year?
Tax Education Series #4: Difference between tax deductions and tax credits
About the Author : I am a cryptocurrency enthusiast and a U.S. Certified Public Accountant with over 15 years of experience in accounting, taxation, and finance.
If you like this education series, please follow me @qwesttexas. I am here to help the Steemit community with tax questions and break down confusing tax jargon into plain English so that we can all benefit from it. Let's go Steem!