But itemized deductions aren't necessarily no-brainers. Here are some things you need to know about what itemized deductions are and what it means to itemize on your tax return. Itemized deductions are basically expenses allowed by the IRS that can decrease your taxable income.
There are dozens of itemized deductions out there. The standard deduction , which is the itemized deduction's counterpart, is basically a flat-dollar, no-questions-asked reduction in your adjusted gross income. You can take either the standard deduction or itemized deductions on your tax return. You can't do both. The question is which method saves you more money. If your standard deduction is more than your itemized deductions, it might be worth it to take the standard deduction and save some time.
When you itemize on your tax return, you opt to pick and choose from the multitude of individual tax deductions out there instead of taking the flat-dollar standard deduction. Itemized deductions might add up to more than the standard deduction. There are hundreds of possible deductions. The IRS allows taxpayers to deduct tons of things, such as medical expenses , property taxes , charitable contributions and mortgage interest.
There are many, many more deductions available. Some situations make itemizing especially attractive. For most people, there is a balance between the work required to itemize and the amount you save by itemizing. Generally speaking, itemizing is a good idea if the value of your itemized expenses is more than the value of the standard deduction.
Because the new tax plan nearly doubled the standard deduction for the tax year when compared with before it went into effect, some people who itemized their taxes will not benefit from itemizing their taxes. Even if itemizing would save you more than the standard deduction, consider the amount of time and energy that also goes with itemizing. The biggest example of that would be keeping track of your receipts and expenses throughout the year.
You should also keep your receipts for seven years after you file your taxes in case of an audit. Email: torem nerdwallet. Home Personal Finance NerdWallet. ET By Tina Orem. Sign 1: You owned a home Mortgage interest, mortgage insurance premiums and property taxes are typically deductible if you itemize, and they can easily exceed the standard deduction for many taxpayers. Sign 3: You donated money or goods to charity Charitable donation s are popular tax deductions, but you can only claim them if you itemize.
Signs of things to come The key is to view the signs cumulatively. My estranged daughter says she only wants my money and jewelry. Still, a few miscellaneous itemized deductions are available, including:. A final, uncommon category of miscellaneous itemized deductions includes unreimbursed employee expenses for individuals in a qualifying job category.
Prior to , these deductions could be made by any employee, but now they're only available to certain performing artists, people in the military reserves, individuals with impairment-related work expenses, and fee-based local or state government officials. If you have any of the above expenses, it's worth your time to investigate further. Taking the standard deduction might be easier, but if your total itemized deductions are greater than the standard deduction available for your filing status, saving receipts and tallying those expenses can result in a lower tax bill.
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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Skip To Main Content. Itemized Deductions: Which Is Better? Standard Deduction vs. OVERVIEW The pressure of a looming tax deadline may make it easier to take the standard deduction rather than itemize your deductions, but you should weigh this question carefully.
Standard deduction vs.
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