To Itemize, Or Not To Itemize?

When you file your tax return, you usually have a choice whether to itemize deductions or take the standard deduction. Before you choose, it’s a good idea to figure your deductions using both methods. Then choose the one that allows you to pay the lower amount of tax. The one that results in the higher deduction amount often gives you the most benefit.

First, figure your itemized deductions. 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

Next, look up your standard deduction. If you don’t itemize, your basic standard deduction for 2013 depends on your filing status:

Married Filing Jointly$12,200
Head of Household$8,950
Married Filing Separately$6,100
Qualifying Widow(er)$12,200

Your standard deduction is higher if you’re over 65, or blind. If someone can claim you as a dependent, that can limit the amount of your deduction.

Finally, check the exceptions. Some people don’t qualify for the standard deduction and therefore should itemize. This includes married couples who file separate returns and one spouse itemizes.

Once you know your standard deduction and your itemized deductions, you want to choose the higher number. This number will be subtracted from the income you have to pay tax on, so the higher the number, the less tax you will pay! If you choose to itemize, use the 1040 long form with Schedule A. If you use the standard deduction, you may be able to use one of the shorter forms to complete your taxes.