Should I Itemize Deductions

Everyone wants to know about itemized deductions. It sounds like something for the very rich and not us commoners, but itemizing can bring benefits if you meet the qualifications to claim enough deductions. Here is some general information about itemizing so that you can make the choice whether or not it is prudent for your tax return.

There are two types of deductions: standard and itemized. The standard deduction is a fixed dollar amount that is used to reduce the amount of taxable income a person has. The less taxable income you have, the less the taxes will be that you are obligated to pay on it.

The standard deduction is based on your tax filing status. If you are filing as Single, the standard deduction is $5,150. The same standard deduction is applied to a person who files as Married Filing Separately. The largest standard deduction is reserved for those filing as Married Filing Jointly or Widow(er) with Dependent Child: $10,300. As Head of Household, the standard deduction is $7,550.

Itemized deductions offer the benefit of converting taxable income into non-taxable income. People who have spent enough money on items or services that qualify for deductions will find that itemizing is more profitable to them than simply claiming the standard deduction in their tax return. There are several categories of possible itemized deductions.

I have seen many interesting commercials over the past few weeks that talk about itemized deductions. One in particular features two guys working at a restaurant dressed in Bavarian outfits. One tells the other how he saved money on his taxes by claiming his lederhosen. It sounds absurd, but there is an itemized deduction for work-related expenses that are not reimbursed to the employee by their employer. You may not wear lederhosen, but uniforms and other materials are deductible when you itemize.

The most common itemized deductions involve health care costs. Someone who has had a long, protracted illness or has cared for an ailing relative has a wealth of deductions that are available to them if they itemize. Money spent on prescription medications, therapy sessions, medical treatments, and equipment all qualify for a deduction. Costs that are not covered by insurance don't have to be chalked up to a loss.

You don't need a certain number of itemized deductions to be allowed to itemize. You could qualify in one category with the purchase of one or more large items. An important thing to remember is that each type of itemized deduction has its own set of guidelines. As long as the sum of money spent is large enough, it can be claimed.

Before running off to itemize, try some initial calculations. Your qualified purchases may be enough to itemize, but if the amount of the deduction is less than the standard deduction you would otherwise receive, then the standard deduction would be the best way to go. If you aren't good with numbers, give the information to your tax preparer and they can run the numbers for you.

Should you itemize? It is a matter of getting the greatest benefit for the best refund on your taxes. Let the numbers be your guide.