This is a common question.
Preparing your taxes through eSmart Tax will automatically
calculate which method is best for you, but it’s reassuring to know how to
decide for yourself.
Liberty Tax reminds taxpayers that they can choose to claim
the standard deduction, which means deducting a flat amount. Or they can itemize their deductions and
subtract certain items and expenses on Schedule A. Itemized deductions include home mortgage
interest and points paid in the year of a home purchase, medical and dental
expenses, deductible taxes, interest expense, charitable contributions,
employee business expenses, and other miscellaneous expenses.
The IRS site provides a list of seven factors that can help
you decide which is best for you:
The following seven
facts from the IRS can help you choose the method that gives you the lowest tax
expenses - Whether to itemize
deductions on your tax return depends on how much you spent on certain expenses
last year. If the total amount you spent on qualifying medical care, mortgage
interest, taxes, charitable contributions, casualty losses and miscellaneous
deductions is more than your standard deduction, you can usually benefit by
deduction amounts -Your standard
deduction is based on your filing status and is subject to inflation
adjustments each year. For 2012, the amounts are:
Married Filing Jointly
Head of Household $8,700
Married Filing Separately $5,950
Qualifying Widow(er) $11,900
taxpayers have different standard deductions - The standard deduction amount depends on
your filing status, whether you are 65 or older or blind and whether another
taxpayer can claim an exemption for you. If any of these apply, use the
Standard Deduction Worksheet on the back of Form 1040EZ, or in the 1040A or
itemized deductions - Your itemized
deductions are no longer limited because of your adjusted gross income.
filing separately - When a married
couple files separate returns and one spouse itemizes deductions, the other
spouse cannot claim the standard deduction and therefore must itemize to claim
their allowable deductions.
taxpayers are not eligible for the standard deduction - They include nonresident aliens,
dual-status aliens and individuals who file returns for periods of less than 12
months due to a change in accounting periods.
- Forms to use - The
standard deduction can be taken on Forms 1040, 1040A or 1040EZ. To itemize your
deductions, use Form 1040, U.S. Individual Income Tax Return, and Schedule A,