Standard and Itemized Deducations
Posted By: Dr. Frugal in Taxes on 08/04/2007 at 14:32:29
When it comes to tax deductions, you have two choices: the standard deduction, which is a fixed dollar amount that you deduct from your taxable income, or itemized deductions. The standard deduction is around $4700 if you're single or just under $8000 if you're married and filing jointly. If you're married but filing separately it's just under $4,000 and just under $7,000 if you're applying as the head of the household.
If your actual allowable deductions total more than the standard deduction, you are guaranteed to save more by itemizing. To see if you qualify, use a copy of the Schedule A Form from Form 1040 (available here from IRS.gov as a PDF) to list the amounts of each of the deductions that apply to you. Some of these deductions include mortgage interest, real-estate taxes, state income taxes, and personal-property taxes. If the total is more than the standard deduction then itemize.
So many deductions have disappeared over the years that if you have no mortgage interest or very low mortgage interest, you probably won't be able to itemize unless you have extremely large medical expenses or significant charitable contributions.
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