Standard Or Itemized Tax Deductions: What’s To Your Best Advantage?
Posted by Tax Man - 20/02/12 at 07:02 amCompleting your tax return can be a lot of work and there are a variety of methods you can use to do this. You have the option of doing them online, or you can purchase a program. You can pay and accountant to complete the return for you, or you can gather all the necessary documents and do them yourself the old fashioned pencil and paper way. Whatever method you chose, it is important that you have all the paper work you need so you can get all the credits or deductions you are qualified for and thus save money.
In 2005, the IRS stated that personal exemptions constituted $842 billion. While I’m sure that everyone takes every chance to save their hard-earned money, here are some more tax deductions that are often overlooked.
One decision that could have an impact on your tax return is whether you decide to use a standard tax deduction or an itemized one. For instance if you are a single tax payer and use the standard deduction, your claim could be $5,350. If you are married and fill a joint tax return the amount is doubled. For head of household and single deduction you could get $7,850.
One of the decisions that could have them most impact on your tax return, financially, is whether you choose to take the standard tax deductions or itemize your return. If you are single tax payer and choose standard for your deduction you could claim $5,350. If you are married-filing-jointly the amount is doubled.? Head of household, and single the deduction comes to $7,850.
According to the GAO, a Congressional investigative group, in 2002 only a third of the nation’s taxpayers chose to itemize. This resulted in a loss of approximately $438 per taxpayer. In aggregate, not itemizing represented a $945 billion overpayment to the government.
Itemizing is a lot of work even if your accountant does the filing, because you have to gather all the information. The taxpayer is responsible for accumulating the records to prove their position and then get it to the CPA or a tax person in a timely manner. Most of us don’t bother to keep records all year round and this can be a really time consuming process which more often than not gets deleted from the “to do” list.
Most homeowners make the decision to itemize their deductions. It is no wonder with all that we are allowed to deduct from our taxes. For example, every homeowner is allowed to deduct state and local income taxes, real estate taxes that were paid, and even the interest on their mortgage. Homeowners are allowed to deduct the cumulative of these from the standard deduction. In addition anyone who is over the age of 65 years old gets an additional $1,300 in deductions. This amount is changed to $1,050 for someone whom is married and filing jointly.
You don’t have to own a home to save money by itemizing on your taxes. All renters can itemize such as fees for advice on investment, making large purchases like a car or appliances. There are so many items can be deducted on your tax return. Collecting this information may pay for itself on your yearly tax returns. You can use sales tax in place of state income tax if you don’t pay income tax in your state.
Ron Finkelstein is NOT a tax lawyer or a CPA.? He is just a small business owner who has paid a lot of cash through the years to get familiar with tax tips like greater understanding of difference between standard deduction and itemized deduction and missed tax deductions
