To Itemize or Not to Itemize

The average taxpayer claims the standard deduction when they file their federal tax return, but some filers may be able to lower their tax bill by itemizing. You can determine which way saves the most money by figuring your taxes both ways.

Here are some tips to help you decide which way to file:

• Figure Your Itemized Deductions. Taxpayers need to add up deductible expenses they paid during the year. These may include expenses such as:
  • Home mortgage interest
  • State and local income taxes or sales taxes (but not both)
  • Real estate and personal property taxes
  • Gifts to charities
  • Casualty or theft losses
  • Unreimbursed medical expenses
  • Unreimbursed employee business expenses
• Know The Standard Deduction. If a taxpayer doesn’t itemize, then the basic standard deduction for 2016 depends on their filing status*. If the taxpayer is:
  • Single - $6,300
  • Married Filing Jointly - $12,600
  • Head of Household - $9,300
  • Married Filing Separately - $6,300
  • Qualifying Widow(er) - $12,600
• Check the Exceptions. There are some situations where the law does not allow a person to claim the standard deduction. This rule applies if the taxpayer is married filing a separate return and their spouse itemizes. In this case, the taxpayer’s standard deduction is zero and they should itemize any deductions. See IRS Publication 17 for more on these rules.
• Use the IRS ITA Tool. Go to IRS.gov and use the Interactive Tax Assistant tool. It can help determine whether a taxpayer can use the standard deduction. It can also help a filer find their eligibility for certain itemized deductions.
• File the Right Forms. For a taxpayer to itemize their deductions, they must file Form 1040 and Schedule A, Itemized Deductions. Filers can take the standard deduction on Forms 1040, 1040A or 1040EZ.

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*If a taxpayer is 65 or older, or blind, the standard deduction is higher than normal. The deduction may be limited if the taxpayer can be claimed as a dependent.