When should you itemize instead of claiming the standard deduction? It’s best to choose the option that results in the larger deduction and lowers your tax obligation.
Choosing to itemize deductions may make sense for you if the total of all your qualified expenses adds up to more than this year’s standard deduction.
The IRS doesn’t often give you options. But it does allow you to choose between taking the standard deduction or the itemized deductions on your income tax return. Visit the IRS' website for specifics on the current standard deductions.
Choosing the standard deduction may make sense for you if you don’t have expenses such as mortgage interest or property taxes.
Your alternative to the standard deduction is to calculate itemized deductions using Form 1040 Schedule A. Itemized deductions require you to keep records, statements or receipts. Examples of eligible expenses include:
- Mortgage interest
- State and local taxes, including income taxes and property taxes
- Eligible medical costs exceeding 10% of your adjusted gross income (AGI)
- Charitable contributions donated to qualified charities or organizations
- Property casualty and theft losses that exceed 10% of your AGI
- Gambling losses up to the amount of gambling income
- Business expenses
The more deductions you can take, the more your total tax bill may be reduced.
Getting help with your tax return is easy
When it comes to tax preparation, LGFCU offers low-cost tax help at a branch near you. Or, take advantage of the TurboTax discount available to Credit Union members, if you prepare your own taxes online.
The advice provided is for informational purposes only. Contact a tax advisor for additional guidance.