When filing your income taxes one of the most common questions for individuals involves itemizing or taking the Internal Revenue Service allowable standard deduction. Depending on your specific tax situation a wrong choice could have definite implications either costing you, especially in the pocketbook, or benefiting your return. Before deciding, knowing what the results of each possible scenario could be and making the correct decision will be extremely important. Also, just because you choose to take a standard deduction most of the time doesn’t mean itemizing couldn’t help, it all just depends on each individual situation and what has taken place in the prior year that could have a tax implication.
Prior to making a decision, let’s look first at what each choice entails and when, most commonly, each is applied.
The IRS defines the standard deduction
as, “a dollar amount that reduces the amount of income on which you are taxed and varies according to your filing status; there is also an additional standard deduction for individuals who are blind or age 65 or over.” Anyone who takes the standard deduction automatically becomes ineligible for itemizing and vice versa.
For the 2017 tax year, applicable during the upcoming 2018 filing season, the standard deduction is as follows depending on your filing status:
Single - $6,350
Married Filing Jointly and Surviving Spouse - $12,700
Married Filing Separately - $6,350
Head of Household - $9,350
Each of these amounts is increased over the 2016 tax year for all filing qualifications.
Itemized deductions are monies spent which may equal more than the allowable standard deduction and can be utilized by individuals or couples if the tax implications are beneficial. For example, if a person filing single can show more than the standard deduction in various expenses then choosing to itemize could prove beneficial.
Some of the expenditures which are allowable in an itemized return are: mortgage interest, real estate and personal property taxes, gifts to charities, theft losses and unreimbursed medical expenses.
Only about one-third of filed tax returns are itemized because typically the standard deduction is enough to cover the tax implications in most cases. However, for those individuals or couples who fall into the one-third of needed itemization the capability to itemize a return can prove beneficial.
Come see the experts at Bloch, Rothman, and Associates
who can help you decide which deduction method is best for you and answer any other questions regarding individual or business income taxes while assisting with a variety of bookkeeping options. A full detailed review of your tax situation can be completed in addition to resolution issues and estate compilations. All services, including free of charge E-filing options will be completed in a timely manner, depending on your restrictions and possible tax deadlines. Whether you need a simple explanation on a random tax form or are in need of a variety of other services our tax experts are ready and willing to assist. Call 303-321-7160 or contact us
for a free, no obligation consultation.