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Standard vs. Itemized Deductions
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Taxpayers are entitled to reduce their current tax liability by using the greater of their:

  • standard deduction
  • itemized deductions

How do you do this?

Your standard deduction is determined by your tax filing status at year end.

In 2014 these are:

  • $6200 for Singles and those Married filing Separately
  • $9100 for Heads of Household
  • $12,400 for Married filing Jointly and Qualified Widow(er)

Compare this to the total of expenses (deductions) you can itemize:

  • Property taxes 
  • Mortgage interest
  • State income taxes
  • Charitable donations
  • Medical Expenses that exceed 10% of Adjusted Gross Income
  • Miscellaneous Expenses that exceed 2% of Adjusted Gross Income: tax preparation fees, safety deposit box rental, unreimbursed business expenses and PlanningforaFuture.com subscription fees
  • Casualty and Theft Losses
  • Interest paid on money borrowed to invest (a risky strategy we do not recommend)

No need to stress. Your tax preparer or tax preparation software will help determine which is best.

<NEXT: Income and Losses against Income>


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