IRS: Standard Deduction vs. Itemizing – Seven Facts to Help You Choose

http://content.govdelivery.com/bulletins/gd/USIRS-31e552?reqfrom=share

Worth reading the article linked to above.  When working with folks on their taxes, the question of itemizing vs. taking the standard deduction comes up very frequently.

The short story is that you should do whichever allows you to pay less in taxes.  Your standard deduction (if you are allowed to take it) effectively sets a threshold.  If your permitted itemized deductions add up to more than your standard deduction, you itemize in order to deduct the larger amount.

The details are where it gets complicated, and where there may be some tax planning opportunities, so it’s worth knowing what may be deducted when you itemize (for example, the biggies are mortgage interest on your home, property taxes and income taxes you pay to your state).  And it’s important to know what may not be deducted when you itemize (some things may not be deducted at all, and some are subject to “floors” wherein one may deduct them only to the extent that they exceed some other values so much of their potential deduct-ability may not be available especially for higher-income folks).

Just for the record here, for 2011, your standard deduction is based on your filing status, whether you are 65 or older, blind, whether another taxpayer can claim an exemption for you.  The basic amounts are as follows:

Single: $5,800
Married Filing Jointly: $11,600
Head of Household: $8,500
Married Filing Separately: $5,800
Qualifying Widow(er): $11,600

Understanding the different filing status is also worthwhile and may be the subject of another article here soon.

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