Itemized Deductions or the Standard Deduction
Choosing the right tax deductions is a key element of preparing your federal tax return. When you prepare your tax return, you will be able to choose between itemizing deductions or taking the standard deduction.
Itemizing deductions means listing them on a Schedule A. Some tax deductions (and all tax credits) may be claimed regardless of whether you itemize deductions or not. Many deductions, however, must be itemized.
Should I Itemize Deductions or Take the Standard Deduction?
If the total amount of your itemized deductions is not greater than the standard deduction amount for your filing status, then you should take the standard deduction instead of itemizing.
When you prepare your federal tax return on efile.com, you will be able to enter itemized deduction information and the software will calculate whether the standard deduction would be worth more to you than itemizing.
Itemized Deductions
You should itemize if the total amount of your itemized deductions is more than your standard deduction amount.
Itemized deductions are certain expenses that you can use to lower your taxes. These include:
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Medical and dental expenses
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State and local income taxes, or sales tax
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Real estate and personal property taxes
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Home mortgage and investment interest
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Charitable contributions
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Casualty and theft losses
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Job-related expenses
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Miscellaneous deductions
Itemized Deduction Limits
Under current tax law, there is no longer an income-based phaseout, or limitation, to the amount of itemized deductions claimed. The phaseouts are scheduled to return in 2013.
The Standard Deduction
The standard deduction is a dollar amount that reduces the amount of your taxable income. You cannot claim the standard deduction if you claim itemized deductions.
The standard deduction amounts for any given tax year are based on filing status.
Find the current standard deduction dollar amounts here
Standard Deduction Limits
When a married couple files separately and one spouse itemizes deductions, the other spouse may not claim the standard deduction.
There are rare cases when a taxpayer may not claim the standard deduction: nonresident aliens, dual–status aliens, and individuals who file returns for periods of less than 12 months do not qualify for the standard deduction, but they may itemize.
If you are claimed as a dependent on someone else's tax return, your standard deduction amount may be limited.
Learn more about the standard deduction
Standard Deduction Additional Amounts
In some cases, the basic standard deduction for your filing status can be increased by certain additional amounts. If you or your spouse are age 65 or older, blind, or claiming a disaster loss, you may qualify for an additional standard deduction amount. If you file a separate return and can claim an exemption for your spouse, you will be allowed any additional amounts that apply to your spouse.
Additional Deduction for Age
The additional deduction amount for age will be allowed if you are age 65 or older on December 31 of the tax year. For tax purposes, you are generally considered to be 65 on the day before your 65th birthday.
Find the 2011 additional standard deduction amount for age here
Additional Deduction for Blindness
The additional deduction amount for blindness will be allowed if you are legally blind on the last day of the tax year. So, a single taxpayer who is age 65 and legally blind would be entitled to a basic standard deduction and two additional deductions.
Find the 2011 additional standard deduction amount for blindness here
Additional Deduction for Disaster Loss
Anyone who suffered a disaster-related casualty loss in a presidentially-declared disaster area may add that amount to their standard deduction in 2011.
Learn more about the standard deduction here