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Standard Deduction vs Itemized Deductions, Which is Right for You?

January 8, 2015

Taxpayers can choose either the standard deduction or itemized deductions to calculate their taxes. If you used a standard deduction when preparing your 2013 return, you can itemize your deductions for 2014, and vice versa.

Standard Deduction

A standard deduction is a lump sum amount that is deducted from the income to lower the total taxable income. The standard deduction limit for 2014 is:

For single and married filing separately           $6,200

For married filing jointly                                    $12,400

For head of household                                    $9,100

Taxpayers that qualify for the standard deduction can choose to take itemized deductions. Some taxpayers, however, qualify to take only itemized deductions. You cannot use the standard deduction in the following cases:

  • If you are married and filing separately and your spouse itemizes deductions
  • If you file taxes for a period less than 12 months because of a change in your annual accounting period
  • If you are a nonresident alien or had dual-citizenship during any part of the year. There are exceptions though; be sure to review them at IRS.gov
  • Estate or trust, common trust fund, or partnership

The advantage of using the standard deduction is that you do not have to take into consideration every item that qualifies for a deduction. Taxpayers that prepare their own returns may find using the standard deduction simpler, as they do not need to take out every receipt and calculate what is allowed.

Itemized Deductions

For itemized deductions, there is no general limit like the standard deduction carries. When itemizing deductions, remember that you cannot claim every dollar that you spend on qualifying expenses. For example, if you are deducting medical expenses and you are 64 or younger, then you can only deduct expenses that cross the 10% limit of your AGI. Any expenses made below the 10% mark are not deductible.

Expenses that can be itemized are:

  • Medical expenses
  • Interest expense
  • Home mortgage points
  • Business use of home
  • Business use of car
  • Charitable donations
  • Deductible taxes
  • Educational expenses
  • Business travel expenses
  • Employee business expenses
  • Casualty, disaster and theft losses

To save the most in taxes, you can calculate your tax liability using both methods to see which one gives you greater benefit.


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