People should understand that they have the option to take a standard deduction or itemize their deductions.

Taxpayers can use the method that allows them to pay less tax. According to changes in tax law over the past two years, people who have detailed in the past may not have to continue to do so, so it is important that all taxpayers analyze which of the two deductions benefits them the most.

Standard Tax Deductions:

The amount of the standard deduction is adjusted each year and may vary by marital status. The amount of the standard deduction depends on the taxpayer’s marital status, whether they are over 65 or blind, and whether another taxpayer can claim them as dependents. Taxpayers who are 65 years of age or older on the last day of the year and do not detail deductions are entitled to a higher standard deduction.

Taxpayers who cannot use the standard deduction are:

  • A married person who files a return as married who files a separate return whose spouse details the deductions.
  • A person who files a tax return for a period of less than 12 months. This could be due to a change in your annual posting period.
  • A person who was a non-resident alien with double status during the year. However, non-resident aliens who are married to a U.S. citizen or resident alien may take the standard deduction in certain situations

Detailed Tax Deductions:

Taxpayers would have to detail the deductions because they cannot use the standard deduction. They can also detail deductions when this amount is greater than your standard deduction. Detailed deductions include amounts you paid in state and local income or sales taxes, real estate taxes, movable property taxes, mortgage interest, and disaster losses from a federally declared disaster. It may also include your charitable donations and some of the amount you have paid in medical and dental expenses.

A taxpayer can benefit from detailing deductions for things including:

  • State and local taxes on income or sales
  • Taxes on real estate and personal property
  • Mortgage interest
  • Mortgage insurance premiums
  • Accidental losses and theft of a federally declared disaster
  • Donations to a qualified charity
  • Unpaid medical and dental expenses exceeding 7.5% of adjusted gross income

However, always remember that individual Deductions may be limited.