Should You Itemize Or Use The Standard Deduction?

By Author: Angela Stringfellow
Total Articles: 8
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Choosing the proper federal tax deductions are an important decision every tax season . As you complete your tax return on eFile, you will be asked whether to itemize deductions or to use the standard deduction. Before you start, please familiarize yourself with the basics.

The standard deduction is a dollar amount that reduces the amount of income on which you are taxed. Please be aware that you are not able to use the standard deduction if you claim itemized deductions.

In general, the basic standard deduction is an amount relative to each tax season and varies according to your filing status. The standard deduction of an individual who can be claimed as a dependent on another person's tax return is the greater of: (1) an amount specified by law, or (2) the individual's earned income plus a specified amount up to the basic standard deduction for his or her filing status.

You should itemize deductions if your allowable itemized deductions are more than your standard deduction. Some taxpayers must itemize deductions because they do not qualify for the standard deduction.

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... hose taxpayers not eligible to use the standard deduction include nonresident aliens, dual-status aliens, and individuals who file returns for periods of less than 12 months. When a married couple files separate returns and one spouse itemizes deductions, the other spouse must also itemize deductions.

Itemized deductions are certain expenses that you can use to lower your taxes:

Medical and dental expenses
State and local income taxes, or sales tax
Real estate and personal property taxes
Home mortgage and investment interest
Charitable contributions
Casualty and theft losses
Job expenses, and
Miscellaneous deductions

If any one or more of these categories of itemized tax deductions is abnormally large, an individual may choose to itemize their deductions for that tax year. You may be subject to a limit on some of your itemized deductions based on your adjusted gross income.

This limit applies to all itemized deductions except medical and dental expenses, casualty and theft losses, gambling losses, and investment interest.

In some cases, your standard deduction can consist of two parts: the basic standard deduction and an additional standard deduction amounts, for age, or blindness, or both. The additional amount is an amount specified by law and varies based on your filing status. If you file a separate return and can claim an exemption for your spouse, you will be permitted to take any additional amounts that apply to you or your spouse.

The additional amount for age will be allowed if you are age 65 or older at the end of the tax year. You are considered to be 65 on the day before your 65th birthday.

The additional amount for blindness will be allowed if you are blind on the last day of the tax year. For example, a single taxpayer who is age 65 and legally blind would be entitled to a basic standard deduction plus an additional standard deduction.

If you or your spouse were 65 or older or blind at the end of the year, be sure to take advantage of the additional standard deduction amounts by checking the appropriate boxes on the online eFile tax preparation software.
To learn more about tax deductions and find tax tips to help you maximize your tax savings, visit http://www.efile.com/tax-deduction. Estimate your federal taxes free at http://www.efile.com/tax-calculator.