The tax deadline is getting closer and closer. And with it come questions that you need to answer. One of the most pressing questions being “Should I itemize my tax return?” It can seem like such a pain, wading through all those receipts. But that can be time and effort well-spent and richly rewarded, once you get your return back from the IRS.
At Hacker Accounting, we know how advantageous it can be to itemize your tax return. Here’s six reasons why you should reconsider going with a standard deduction- Itemizing your tax return is the way to go!
Your Expenses Exceed Your Deduction
First of all, you should definitely itemize your return if your allowable expenses exceed your standard deduction for your filing status. Your allowable expenses includes: state income or sales taxes, medical expenses, charitable donations, home mortgage interest and property taxes. To give you an idea of the kind of numbers you’re dealing with, here are the return numbers that people filing for 2015 returns need to exceed:
- $6,300 is the standard deduction for single taxpayers
- $12,600 is the standard deduction for married taxpayers filing jointly
- $9,250 is the standard deduction for head of household taxpayers
These numbers can change, though, depending on your age and filing status. Therefore, it’s best to consult a professional before making a decision as to whether you should itemize or not.
You Could Save More
Compare and contrast itemizing versus your standard deduction. In some cases, you could end up saving more money by itemizing than going the easy route and taking the standard deduction. Itemizing takes more time and requires more documentation, but the savings you can gain from it is worth the added effort.
Your Standard Deduction Is Zero
You should itemize your tax return if your standard deduction is zero AND one of these conditions applies to your situation:
- You’re married to a spouse who is itemizing their deductions and you’re filling a separate return.
- You are filing a return for a short tax year because of a change in your annual accounting period.
- You’re a dual-status alien or nonresident. You’re considered a dual-status alien if you were both a resident alien and a nonresident during the year.
Knowledge Is Power
In addition, itemizing your return forces you to really examine all your finances. It helps you track expenses like medical costs, house payments, work supplies, and other essentials. By having to put your own finances under such intense self-scrutiny, it can give you a healthier and more well-rounded view of your own finances. You can notice patterns of spending and costs that you could work on in the next year and make smarter financial decisions. These are crucial details that you could miss out on if you just took a standard deduction.
You’ve Donated To Charities
You can deduct charitable donations only if you itemize your deductions. Be sure to add up all the money you donate to charitable organizations. Make sure you have records and paperwork to back up your deductions. The IRS closely scrutinizes charitable donations. Make sure that the numbers you’re reporting are accurate. Don’t overestimate them or try to deduct anything that isn’t related to charity as a charitable donation.
You’ve Had Medical Expenses
Medical problems can be an incredibly expensive burden to shoulder. Luckily the government is willing to cut you some slack come tax-time when it comes to your medical expenses. You can deduct your medical expenses, but you’ll need to itemize them. Keep complete records of all your doctor visits, your hospital stays, any medicine or additional services you had to pay for out of pocket. If it’s even remotely relating to health concerns, get a receipt for it. Even the gas you spend to go to the hospital. Therefore, have a copy of everything on hand so you can itemize it later.
Looking for more information on how to save money with your tax return? Give Hacker Accounting a call at 602-375-5251.