Is Itemizing Tax Deductions Only For the Wealthy?
Author: WilliamBlake Total views: 8 Word Count: 529
Many people are curious as to the benefits of itemizing their tax deduction when they file. Although many feel that the option to do so really only applies to the wealthy, that is not the case. If you meet the criteria to do so, you may find doing so very beneficial. The following information should help you decide if it's right for you or not.
There are two types of deductions: standard and itemized. The standard deduction is a fixed dollar amount that is used to reduce the amount of taxable income a person has. The less taxable income you have, the less the taxes will be that you are obligated to pay on it.
The standard deduction is based on your tax filing status. If you are filing as Single, the standard deduction is $5,150. The same standard deduction is applied to a person who files as Married Filing Separately. The largest standard deduction is reserved for those filing as Married Filing Jointly or Widow(er) with Dependent Child: $10,300. As Head of Household, the standard deduction is $7,550.
The benefits of itemizing your deductions are that you may be able to list some income that would ordinarily be taxed as non-taxable. If you have enough expenditures that fit into this category, you will definitely come out ahead by filing this way instead of just taking the standard deduction. What are some things that fit into that group?
One possible item that you can itemize as tax deductible would be any work oriented expenditure that you are not payed back for. For example, if you are required to buy your own clothing or a uniform where you work, you can itemize that expense on your tax return. Any other items that you are required to buy for your job and not compensated for also fits into this category and can be itemized. When you add up this expense at the end of the year, you may be surprised as to the amount of money you can claim as deductible.
Another expense, and the most frequently itemized, would be those associated with health care. If you have long suffered from a debilitating illness or are caring for a family member who is, you are eligible for a wide array of deductions. Some of the expenses that can be itemized include medications, therapy, treatments, and any equipment needed. Although many feel that this money is simply lost, that doesn't have to be the case.
To be eligible to itemize your deductions, there isn't a specified amount of deductions that you need to meet. A large expenditure may be enough. Be sure to do your homework. Each kind of item that can be deducted is governed by different rules. If you spend enough money, though, you will be able to itemize the expense.
How can you decide whether or not to itemize your deductions? Do the math. Whichever option will get you the largest amount of money back will be what's right for you.
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