- Days left
Taxpayers pay income tax on their income, less certain deductions. One choice is between the "standard deduction" and "itemized deduction," and taxpayers are allowed to use whichever number is higher. Many taxpayers use the standard deduction because it is easy. It is a flat amount determined by the IRS and no documentation is required to be able to use it.

The itemized deduction is an accumulation of certain expense items, and the taxpayer must have documentation of these expenses and must report those amounts to the IRS. The most common items included in the itemized deduction total are mortgage interest, property taxes, state income taxes, charitable contributions, and medical expenses.

It makes sense to take advantage of the itemized deduction if it benefits you. It is usually only beneficial if a taxpayer owns a home with a mortgage, but other taxpayers may also use it if they choose. It pays to check the IRS rules and see if you're better off claiming the itemized deduction, because it might save you a lot of money.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

Increase your money and finance knowledge from home

How Financial Planners go Grocery Shopping

Learn to shop smart and save.

View Course »

What is Inflation?

Why do prices go up?

View Course »

TurboTax Articles

Top 5 Reasons to Adjust Your W-4 Withholding

Common lifestyle changes, like getting a job or getting married, can change your tax liability. To avoid being caught off guard by an unexpected tax bill or huge tax refund, you'll need to adjust your withholdings on your paycheck.

Does Everyone Need to File an Income Tax Return?

Not everyone is required to file an income tax return each year. Generally, if your total income for the year doesn't exceed the standard deduction plus one exemption and you aren't a dependent to another taxpayer, then you don't need to file a federal tax return. The amount of income that you can earn before you are required to file a tax return also depends on the type of income, your age and your filing status.

How to Write Off Sales Taxes

The Internal Revenue Service (IRS) permits you to write off either your state and local income tax or sales taxes when itemizing your deductions. People who live in a state that does not impose income taxes often benefit most from this deduction. However, you might also be better off deducting sales taxes instead of income taxes if you make large purchases during the year and your total sales tax payments exceed those for state income tax. You can use either the actual sales taxes you paid or the IRS optional sales tax tables.

Add a Comment

*0 / 3000 Character Maximum