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Tax Tip: Standard vs Itemized Deduction

Tax Tip: Deciding Whether to Itemize or Use the Standard Deduction

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Today’s tax tip is a common question that we get from many filers on what they can deduct on their taxes. For many easy tax filers (i.e single w-2 filers who are renting) taking the standard deduction is the best bet, and makes filing your return easier. The most common deduction that would signify that you might be eligible to qualify for itemized deduction is if you own a home. If you still aren’t sure, following the steps below will give you a good indication.

1. 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

Special rules and limits apply. Visit IRS.gov and refer to Publication 17, Your Federal Income Tax, for more details.

2. Know Your Standard Deduction. If you don’t itemize, your basic standard deduction for 2015 depends on your filing status:

  • Single $6,300
  • Married Filing Jointly $12,600
  • Head of Household $9,250
  • Married Filing Separately $6,300
  • Qualifying Widow(er) $12,600

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. You usually will pay less tax if you itemize. See Publication 17 for more on these rules.

4. Use the IRS ITA Tool. Visit IRS.gov and use the Interactive Tax Assistant tool. It can help determine your standard deduction. It can also help you figure your itemized deductions.

5. File the Right Forms. To itemize your deductions, use Form 1040and Schedule A, Itemized Deductions. You can take the standard deduction on Forms 1040, 1040A or 1040EZ.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.