Standard or itemize?
It’s time to file tax returns, and none of us wants to pay more than we need to. Most people have the option of taking the standard deduction or itemizing on Schedule A. Taking the standard deduction may be quick and easy, but you might save more taxes by itemizing.How do you know what will be best for you? For some people there’s no question. If all you have is a W2 and $14.95 in interest on your savings account, take the standard deduction. On the other hand, if you spent a month in the hospital, have a large mortgage, bought a new car, and give generously to charity itemizing is the way to go.Folks who fall somewhere in between may need to invest some time comparing their itemized deductions with the standard deduction to see which works best for them.First, determine what your standard deduction would be. For 2012 the amounts are:
- $5,950 if you’re filing Single
- $11,900 for Married Filing Jointly
- $8,700 for Head of Household
- $11,900 for Qualifying Widow(er)
- $5,950 for Married Filing Separately (beware on this one; if your spouse itemizes, you must too)
Next, figure your itemized deductions. Include mortgage interest for your home, as well as real estate and property taxes. If you pay state taxes, that amount is deductible; if you don’t, take the sales tax deduction. Your charitable gifts are deductible as well as certain miscellaneous items (see our earlier blog).Additionally, if you paid some major medical expenses or incurred theft or casualty losses that weren’t reimbursed by insurance, you can claim a portion of them.Compare the two and use the method that gives you the bigger deduction.Other wrinkles apply if you’re older than 65, blind, or if you can be taken as a dependent on someone else’s return.If it all seems too complicated and you need the help of a good CPA, get in touch. You can reach us at Office@CPAsite.com or 904-396-5400.
