When it comes to filing your federal income tax return, there are two ways to take deductions: itemizing or using the standard deduction. Deductions lower the amount of your taxable income, so it's important to consider which method will result in a lower tax for you.
The standard deduction is a fixed amount that adjusts annually based on your filing status, age, and whether you are blind or someone else can claim you as a dependent. Some taxpayers are not eligible for the standard deduction, including married individuals filing separately whose spouse itemizes deductions, those who file a tax return for a period less than 12 months due to a change in their annual accounting period, and nonresident or dual-status aliens. However, nonresident aliens who are married to a U.S. citizen or resident alien at the end of the year and choose to be treated as U.S. residents for tax purposes can use the standard deduction.
If you are unable to use the standard deduction or the amount of your itemized deductions is greater than the standard deduction, you may want to consider itemizing. This involves listing out and claiming individual deductions for specific expenses such as state and local income or sales taxes, real estate and personal property taxes, mortgage interest, personal casualty and theft losses from a federally declared disaster, donations to qualified charities, and unreimbursed medical and dental expenses that exceed 7.5% of your adjusted gross income.
It's important to note that recent tax law changes may affect whether you want to continue itemizing deductions. It's a good idea to review all of the deductions available to you and determine the method that will result in the lower tax. If you need help deciding which option is best for your individual tax planning needs, you can seek the assistance of a professional.
In summary, the standard deduction is a fixed amount based on your filing status and other factors, while itemizing deductions involves listing out and claiming individual expenses. It's important to consider which method will result in a lower tax for you, and to review all available deductions. If you need help deciding which option is best for your situation, you can seek the assistance of a professional.
This post is general information about federal and state tax rules, not advice about your situation. Rules change. Check the date above before you rely on anything here, and talk to us about your own facts.