What Does It Mean to Itemize My Taxes?
Tax time can be stressful, especially if you're trying to figure out what itemized deductions are and if they're right for your tax situation.
No matter what your financial situation, your goal is to pay the least amount possible in taxes. Learn more about the options for deductions to help you decide whether itemizing is best for you.
When you file your taxes, you can take deductions for certain expenses, which lowers your tax liability. Deductions come off of your total income, which lowers your taxable income for the year.
You can either take a standard deduction — which is a set amount based on your filing status — or use itemized deductions. When you itemize, you list individual items that qualify as deductions along with the actual amounts you spent on those items. Those individual deductions are added up to get your total deduction.
You can deduct a wide range of expenses you might incur throughout the year. Some expenses can only be deducted if you itemize. These deductions include:
- Home mortgage interest
- Property taxes
- Real estate taxes
- Charitable donations
- Moving expenses
- Gambling losses
- Medical and dental expenses for the amount that exceeds 7.5% of your adjusted gross income
- Casualty and theft losses
- Unreimbursed job-related expenses
Itemized deductions can be confusing. If you're not sure whether an item qualifies, consult with a tax professional.
Itemized deductions are only beneficial to certain people. If the individual amounts that qualify as itemized deductions add up to more than the standard deduction amount, itemized deductions will lower your tax liability. Most people don't have enough qualifying deductions to make it beneficial.
Itemizing your deductions can also take more time. You'll need to add up your total deductions and provide proof of the expenses, such as receipts showing the expenses. There are also rules and limitations on some deductions, such as the limit on the medical and dental expenses you can deduct. You'll need to understand those rules and use them when calculating your taxes. With the standard deduction, you automatically get the amount you qualify for based on your status without any questions, qualifications or proof, which simplifies your tax return.
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