Tax Returns Should You Itemize

Tax Returns - Should you​ Itemize?
When you​ finally decide it​ is​ time to​ prepare your taxes,​ the​ first question is​ whether you​ should itemize your deductions or​ take the​ standard deduction provided by the​ IRS .​
Choices,​ Choices…
Tax deductions are a​ very simple part of​ a​ theoretically simple tax reporting system .​
If you’ve ever prepared your own taxes,​ you​ know this simply isn’t true .​
Complicated tax forms can be a​ nightmare to​ fill out .​
Ever helpful,​ the​ IRS gives you​ an​ option of​ just taking a​ standard deduction instead of​ itemizing your deductions .​
So,​ what should you​ do?
The standard deduction is​ the​ easiest method because it​ requires no calculations or​ supporting documentation of​ any sort .​
You figure out your adjusted gross income and simply submit the​ amount for your classification .​
The amount differs based on​ whether you​ are filing as​ single,​ married,​ older than 65 or​ have kids.
Many people scoff at​ the​ mere idea of​ taking the​ standard deduction .​
As with all tax issues,​ deciding whether to​ take the​ standard deduction isn’t so easy .​
If you​ have a​ fairly simple financial life and don’t have many deductions,​ the​ standard deduction is​ almost always the​ best choice .​
For instance,​ if​ you​ make $45,​000 as​ an​ employee of​ a​ company,​ rent a​ residence and don’t have any major medical bills or​ losses,​ the​ standard deduction is​ probably going to​ save you​ more money than itemizing .​
Unfortunately,​ you​ can never be sure until you​ take a​ stab at​ itemizing your deductions in​ a​ rough draft of​ a​ tax return.
Itemizing your deductions is​ exactly what it​ sounds like .​
You literally go through your records and categorize every possible deduction .​
These deductions are then subtracted from your adjusted gross income to​ get a​ final figure from which tax is​ determined using the​ tax tables .​
Itemizing is​ the​ way to​ go if​ you​ have significant tax deductions or​ tax credits in​ your financial life .​
For instance,​ you​ almost always want to​ itemize if​ you​ own a​ home as​ mortgage interest can be deducted .​
Generally,​ you​ want to​ itemize if​ you​ own a​ home,​ have significant medical bills,​ can claim a​ tax credit or​ suffered some type of​ major loss .​
Obviously,​ there are other situations where itemizing makes sense,​ but this gives you​ an​ idea of​ the​ situation .​
If you​ have a​ simple financial situation,​ claiming the​ standard deduction may be the​ answer .​
If life is​ a​ bit more complicated,​ itemizing is​ probably going to​ save you​ more on​ your tax bill.
Tax Returns Should You Itemize Tax Returns Should You Itemize Reviewed by Henda Yesti on July 02, 2018 Rating: 5

No comments:

Powered by Blogger.