Claiming deductions on your tax return can be done in two different ways, and it’s good to determine which method will save you the most money. According to the IRS, most people claim the standard deduction, or a dollar amount that is adjusted each year for inflation and varies according to your filing status. But don’t be too quick to choose standard deduction. Itemizing deductions may lower your tax bill. Who can argue with that?
Here are a few tips from the IRS to help you figure out whether itemized or standard deduction is right for you.
- Determine your itemized deductions. What expenses from the year can you deduct? These may include home mortgage interest, state and local income taxes or sales taxes, real estate and personal property taxes, gifts to charities, unreimbursed medical expenses and more.
- Know your standard deduction. The basic standard deductions for tax year 2015 are as follows:
- Single $6,300
- Married Filing Jointly $12,600
- Head of Household $9,250
- Married Filing Separately $6,300
- Qualifying Widow(er) $12,600Note: If you’re 65 or older or blind, your standard deduction is higher than these amounts. If someone can claim you as a dependent, your deduction may be limited.
- Check the exceptions. In some cases, a person cannot claim the standard deduction. This applies if you are married filing a separate return and your spouse itemizes.
- Use the IRS Interactive Tax Assistant Tool. This tool can help figure out your standard deduction or itemized deductions.
- File the right forms. If you chose to itemize your deductions, you must use Form 1040 and Schedule A. For claiming the standard deduction, you can use forms 1040A or 1040EZ.
TaxSlayer’s step-by-step deduction guide helps ensure accurate entry of your tax deductions. To see how we can cut your tax bill, register or finish your return today.