Standard vs. Itemized Deduction: What You Need to Know
It’s an issue many taxpayers find difficult to wrap their heads around, standard vs itemized deduction. It sounds difficult to those without much accounting experience, but the concept is simple. Luckily, the team at Broussard Poché, LLP has taken the time to demystify the itemized deduction process for you.
The standard deduction is a deduction determined by the IRS every year for every taxpayer. The amount of the deduction is dependent on your filing status.
2016 Standard Deduction
- Single and Married Filing Separately- $6,300
- Married or Qualifying Widow(er)- $12,600
- Head of Household – $9,300
Itemized deductions are various items that you’ve paid throughout the year that the IRS lets you take advantage of on your tax return.
2016 Itemized Deductions Include:
- Home Mortgage Interest
- Mortgage insurance premiums
- State and Local income taxes or sales tax (only one or the other)
- Other taxes
- Charitable donations
- Real estate and personal property taxes
- Casualty or theft losses
- Unreimbursed medical expenses
- Unreimbursed business
- Certain miscellaneous deductions (tax preparation fees, investment fees, etc.)
It’s important to know that there are special rules and limits that apply to itemized deductions as well as additional items that you may be able to take advantage of. The list we provided are the most common.
To figure out which deduction is right for you, we suggest that you add up the items you would use for the itemized deduction list then compare it to the standard deduction. The one that saves you the most money is the one you should choose.
If you have any questions call your tax professional or you can look up the information yourself at IRS.gov, look for Publication 17.