To itemize or not to itemize? This is a question many taxpayers find themselves asking when tax season rolls around.
Thankfully, deciding whether you should itemize your deductions or take the standard deduction is usually straightforward. The main question you need to answer is: “Which method leads to a greater tax deduction for me?”
The standard deduction explained: What is the standard deduction?
The standard deduction is essentially a federal income tax freebie for everyone — it’s a flat dollar-for-dollar reduction of your taxable income no matter your tax bracket.
Any American taxpayer can take the standard deduction. How much you can deduct depends on your tax filing status. Here are the standard deduction amounts for filers in tax years 2023 and 2024:
Tax filing status
Standard deduction 2024
Standard deduction 2023
Single filers
$14,600
$13,850
Head of Household
$21,900
$20,800
Married filing jointly and surviving spouse
$29,200
$27,700
Married couples filing separately
$14,600
$13,850
Most taxpayers tend to take the standard deduction because it’s easy to do, and their itemized deductions wouldn’t end up being greater than their standard deduction anyway.
As you can see in the table above, the standard deduction typically increases every year to keep up with inflation. It can also be worth more in certain circumstances, like for taxpayers who are blind or over age 65.
If you aren’t sure what standard deduction amount you qualify for, try using the IRS How Much Is My Standard Deduction? tool.
Sometimes you can take other tax deductions in addition to the standard deduction. These are called above-the-line deductions. Some common above-the-line deductible expenses include:
Student loan interest
Educator expenses
Health insurance deduction
Half of self-employment taxes
Health Savings Account (HSA) deductions
Itemized deductions explained: What are itemized deductions?
Unlike the standard deduction, itemized deductions are different for everyone depending on your tax situation and how much you spent on qualified deductions during the tax year.
Some common itemized deductions include:
Basically, add up all your possible itemized deductions. Is the amount greater than your standard deduction would be? If so, you could probably save money on your tax bill from itemizing this year! You can do this by using Schedule A when filling out your income tax return.
Just know that reporting every qualified itemized deduction can take a while. It takes patience and good recordkeeping throughout the year to ensure you’re maximizing your savings and not forgetting any deductions.
Pros and cons of standard vs. itemized deductions
Standard deduction
Itemized deductions
Pros
Quick and easy – no need to add up a list of individual deductions or keep a bunch of receipts.
Amount typically increases every year.
Taxpayers over age 65 or those who are blind get an increase to their standard deduction.
Could add up to be worth more than the standard deduction.
Beneficial for homeowners who pay a lot of mortgage interest and property taxes.
Huge list of possible deductions to qualify for.
Cons
You could be leaving money on the table if your itemized deductions would have been more than your standard deduction.
If you are married filing separately and your spouse chooses to itemize, you must itemize as well.
More complex – you must know the rules and limits of each deduction.
Takes more time and meticulous recordkeeping.
It typically takes a lot of itemized deductions to add up to greater than the standard deduction.
The bottom line
To maximize your tax savings, you should run the numbers both ways and choose the method that gives you the largest deduction.
Are your itemized deductions greater than your standard deduction? If so, itemizing would save you money in most cases.
Are your itemized deductions less than your standard deduction? If so, you’re better off taking the standard deduction.
When you use TaxAct® as your tax preparation software, we can help you add up all your itemized deductions. This way, you’ll easily be able to see if itemizing would result in a better tax benefit than taking the standard deduction. No need to be a personal finance professional or a tax pro — we’ll help you file with ease this season.
This article is for informational purposes only and not legal or financial advice.
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