The standard deduction is a specific amount that you can deduct from your taxable income before calculating your taxes. The amount of the standard deduction varies depending on your filing status and is adjusted annually for inflation.
Itemizing deductions means that you can deduct certain expenses from your taxable income, such as mortgage interest, state and local taxes, charitable contributions, and medical expenses. You can only itemize deductions if your total itemized deductions are greater than the standard deduction.
Here is a table that summarizes the key differences between the standard deduction and itemizing deductions:
| Feature | Standard Deduction | Itemized Deductions |
|---|---|---|
| Amount | Set amount based on filing status | Varies depending on expenses |
| Eligibility | Available to all taxpayers | Only available if itemized deductions exceed standard deduction |
| Simplicity | Easy to use | More complex and requires record-keeping |
Which is better for you?
The best way to determine whether you should take the standard deduction or itemize your deductions is to compare your itemized deductions to the standard deduction for your filing status. If your itemized deductions are greater than the standard deduction, then it makes sense to itemize. Otherwise, you should take the standard deduction.
Here are some factors to consider when making your decision:
- Your filing status. The standard deduction is higher for married couples filing jointly than it is for single filers.
- Your income. If you have a high income, you are more likely to benefit from itemizing your deductions.
- Your expenses. If you have a lot of deductible expenses, such as mortgage interest, state and local taxes, and charitable contributions, then you are more likely to benefit from itemizing your deductions.
If you are not sure whether you should take the standard deduction or itemize your deductions, you can use the IRS’s Interactive Tax Assistant tool to help you make a decision.
Here are some additional tips for itemizing deductions:
- Keep good records of your expenses. You will need to be able to provide documentation to the IRS if you are audited.
- Use a tax preparation software program. This can help you to track your expenses and make sure that you are claiming all of the deductions that you are entitled to.
- Consider consulting with a tax professional. A tax professional can help you to determine whether you should itemize your deductions and can help you to prepare your tax return.
By following these tips, you can make sure that you are taking advantage of all of the deductions that you are entitled to and that you are paying the lowest possible amount of taxes.
Itemized Deduction vs. Standard Deduction, Explained.
FAQ
Why is the standard deduction better than itemized?
When should you not take the standard deduction?
What are the cons of the standard deduction?
Should I use standard deduction or itemized calculator?
Should I take the standard deduction or itemize my deductions?
One of the first decisions taxpayers must make when completing a tax return is whether to take the standard deduction or itemize their deductions. There are several factors that can influence a taxpayer’s choice, including changes to their tax situation, any changes to the standard deduction amount and recent tax law changes.
Should you take a standard deduction if your deduction is less?
“Generally, taxpayers whose total itemized deductions are less than the standard deduction (based on their filing status) will benefit from taking the standard deduction. However, if the taxpayer’s total itemized deductions are greater than their standard deduction, they must itemize,” says Kathy Pickering, chief tax officer at H&R Block.
When should I itemize my tax deductions?
Single or married and filing separately: Only itemize your deductions if they add up to more than the standard deduction of $13,850. Married filing jointly: Only itemize your deductions if they add up to more than the standard deduction of $27,700.
Does itemizing lower your tax bill?
Claiming the standard deduction is easier because you don’t have to keep track of what you spent, or hold on to supporting documents like receipts, bank statements, medical bills and tax forms. However, if your total itemized deductions are greater than the standard deduction available for your filing status, itemizing can lower your tax bill.