Tax season is here and Americans are trying to max out the refund on their filing by choosing and identifying the difference between standard deductions vs. itemized deductions.
Standard And Itemized Deduction: Which Should I Choose? (PHOTO: Forbes)
What Is The Difference Between Standard Deductions vs. Itemized Deductions?
When filing tax returns, taxpayers should first identify the difference between standard deductions and itemized deductions.
Claiming using a standard deduction
The standard deduction is a flat amount determined by the IRS based on your filing status. If you claim the standard deduction, you’ll simply enter the available standard deduction on your Form 1040.
Claiming using Itemized Deductions
Itemized deductions are what you spent on certain deductible expenses, such as medical expenses, state and local taxes, mortgage interest, and charitable deductions. If you itemize, you’ll need to list each of these expenses on Schedule A and attach it to your tax return.
Standard Deduction vs. Itemized deductions
The difference between standard deductions vs. itemized deductions. Is when 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. Moreover, a standard deduction is equal to an adjustment in your adjusted gross income, with it being the most popular option for Americans, with 87.3% electing it when filing their taxes.
However, For an expense to be considered eligible for itemized deduction, an individual must have more than 12,950 dollars in eligible deductions, which would then lead him to have a smaller taxable income amount. According to IRS if you consider itemizing any deductions on their filing. A taxpayer won’t be able to use the standard deduction, or they’ll limit the amount they can claim. Taxpayers are also unable to make large contributions to qualified charities nor can’t have any other large itemized deductions listed. Additionally, Taxpayers won’t be able to apply for mortgage interest or real property taxes and large unreimbursed medical or dental expenses can’t be had either.
For 2022 tax returns filed in 2023, the standard deduction numbers to beat are:
- $12,950 for single taxpayers and married individuals who file separately
- $19,400 for heads of household (HOH)
- $25,900 for married couples who file jointly or qualifying widow(er)
If taxpayers aged 65 or older or blind can claim higher standard deductions. A worksheet in the IRS Instructions for Form 1040 can assist you to calculate this amount.
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