Should You Itemize Deductions On Your Tax Return?

Standard or Itemized: Choose the Deduction Method That’s Best for You

Most people claim the standard deduction when they file their federal tax return. But did you know that you may lower your taxes if you itemize your deductions? When we do your taxes, we compare your total itemized deduction to the standard deduction.  The number we choose to use is subtracted from the amount you have to pay tax on, so we select the largest number, ensuring you pay a lower amount of tax.  Here are some of the things we consider when we’re deciding which one to use:

1. First, we figure your itemized deductions.  This means we add up deductible expenses you paid during the year. These may include expenses such as:  

  • Home mortgage interest
  • State and local income taxes or sales taxes (but not both)
  • Real estate and personal property taxes
  • Gifts to charities
  • Casualty or theft losses
  • Unreimbursed medical expenses
  • Unreimbursed employee business expenses

2. Once we’ve figured out your itemized deductions total, we compare it to your standard deduction.  Your basic standard deduction for 2014 depends on your filing status:     

  • Single $6,200
  • Married Filing Jointly $12,400
  • Head of Household $9,100
  • Married Filing Separately $6,200
  • Qualifying Widow(er) $12,400             

If you’re 65 or older or blind, your standard deduction is higher than these amounts. If someone can claim you as a dependent, your deduction may be limited.

3. Check the exceptions.  There are some situations where the law does not allow a person to claim the standard deduction. This rule applies if you are married filing a separate return and your spouse itemizes. In this case, you can’t claim a standard deduction.

To itemize your deductions, we use Form 1040 and Schedule A, Itemized Deductions. If you take the standard deduction, we can use 1040, 1040A or 1040EZ, whichever is most appropriate for your situation.