Unsure of whether you should use the standard deduction amount, or take the time to itemize deductions? The answer is fairly straightforward; you should itemize deductions if your total deductions are more than the standard deduction amount. Also, you should itemize if you don’t qualify for the standard deduction. Taxpayers should initially calculate itemized deductions and then compare that amount to their standard deduction to determine which provides the greater benefit. A taxpayer may be subject to a limit on some itemized deductions if he or she exceeds the adjusted gross income limits.
You may benefit from itemizing your deductions on Schedule A filed with Form 1040 if you:
• Don’t qualify for the standard deduction, or the amount which you can claim is limited;
• Paid interest and taxes on your home;
• incurred large uninsured medical and dental expenses during the year;
• incurred large uninsured casualty or theft losses;
• Had large unreimbursed employee business expenses or other miscellaneous deductions;
• Made large contributions to qualified charities; or
• Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled.
If you decide to itemize your deductions, complete Schedule A and attach it to your Form 1040.
Even if your itemized deductions are less than your standard deduction, you may still elect to itemize deductions on your federal return rather than take the standard deduction. You may want to do this if, for example, if the tax benefit of itemizing your deductions on your state tax return is greater than the tax benefit you lose on your federal return by not taking the standard deduction.
If you don’t itemize your deductions and later realize you should have itemized, or if you itemize your deductions and later find you shouldn’t have, you can amend your return. Spouses may change methods of taking deductions only if both make the same changes. Both spouses must file a consent to assessment for any additional tax either spouse may owe as a result of the change. You and your spouse can use the method that gives you the lower total tax, even though one of you may pay more tax than you would have paid by using the other method.
If you have questions about whether you should use the standard deduction or itemize deductions, call THE TAX EXPERTS AT THE Thorgood law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.
