Optima Tax Relief helps Taxpayers understand the Difference between Standard and Itemized Deductions
The benefit of using deductions on your tax return is that the amount of taxable income will be reduced when filing a federal income tax return. This means that an individual’s tax liability for the tax year they are filing for can be reduced.
Optima Tax Relief helps taxpayers understand what a standard and itemized deduction are. Most taxpayers have the choice of taking either deduction, for those who choose to take a standard deduction, it will be much quicker and easier to place on a return. If an individual chooses to itemize their deductions, may have their taxes lowered more.
Here are additional details taxpayers should know about both deductions:
The standard deduction is defined as an amount that reduces taxable income. This amount will adjust and can vary based on an individual’s filing status. The standard deduction amount also depends on whether a taxpayer is 65 or older or blind, and whether another taxpayer can claim them as a dependent. Taxpayers who are age 65 or older on the last day of the year and do not itemize their deductions are entitled to a higher standard deduction.
Taxpayers have the option to itemize their deductions because that amount is higher than their standard deduction. Using the itemized deduction may result in owing less in taxes or receiving a much larger refund.
A taxpayer may benefit by itemizing deductions if any of the following apply to their tax situation, they:
- Had large uninsured medical and dental expenses.
- Paid interest and taxes on their home.
- Had large uninsured casualty or theft losses.
- Made large contributions to qualified charities.
Individual itemized deductions may be limited. Schedule A, (Form 1040 or 1040-SR), Itemized Deductions can help determine what limitations may apply.