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Itemize Deduction Or Standard Deduction?

eFile.com Tax Ideas

When you prepare and e-File your 2020 Tax Return via eFile.com, you don't have to worry which deduction method is best for you. Based on the tax information you enter during the tax interview, the eFile Tax App will suggest the best deduction method to you, as we want you to keep more of your hard earned money. It's that simple.

Whether to apply the standard deduction or itemized deduction method on a tax return is a confusing decision for most taxpayers. Have no fear, we are here to make it easy for you! The general rule of thumb is, if the standard deduction amount for your filing status is greater than your total itemized deductions, then you should take the standard deduction. Otherwise, you should claim itemized deductions on your tax return.

So how do you decide which is better for you? 

Again, when you prepare your return on eFile.com, we will calculate which is better for you and which gives you the most tax advantages (the largest refund or the lowest taxes owed), the Standard Deduction OR Itemized Deductions for your tax return. Once you have prepared your return, you can view the results and see which method was chosen for you. If you need to change it for other reasons, it is simple to change it as well.

With tax reform and the increased standard deduction amounts, the standard deduction will be the best choice for a lot of folks. You can see the standard deduction dollar amounts. If you want more information about whether to claim the standard deduction or itemized deductions, read on or start your return on eFile.com and see the actual results based on your personal tax situation. 

Standard Deduction

The standard deduction is a dollar amount that reduces the amount of your taxable income. The standard deduction amounts for any given tax year are based on filing status. See the current standard deduction dollar amounts.

You cannot claim the standard deduction if any of the following situations apply to you: 

  • You claim itemized deductions
  • If you are married, filing as Married Filing Separately, and your spouse itemizes
  • You are a nonresident alien, dual–status alien, or an individual who files tax returns for periods of less than 12 months

Your standard deduction may be limited if you are claimed as a dependent on someone else's tax return; for example, if you are claimed as a dependent on your parents' tax return.

Standard Deduction Additional Amounts

There are additional standard deduction amounts based on the following factors:

  • Age: You can claim the additional standard deduction amount for age if you are 65 or older on the last day of a tax year, except if your birthday is January 1. For tax purposes, you are 65 or older on December 31 of the tax year or January 1 of the following year.
  • Blindness: You can claim the additional standard deduction amount for blindness if you are legally blind on the last day of a tax year. Therefore, if you are age 65 and legally blind, you would be entitled to a basic standard deduction and two additional deductions.
  • Disaster loss: If you had a disaster-related casualty loss in a presidential-declared disaster area, you may add an additional amount to your standard deduction.

If you are still not sure which tax deduction to use on your tax return, eFile.com can make this easier for you. When you prepare your tax return on eFile.com, based on the information you provide, we will calculate your standard deduction amount.

Itemized Deductions

Itemized deductions are types of expenses that you have during the year that the IRS considers to be tax deductible. These include:

You should itemize if the total amount of your itemized deductions is more than your standard deduction amount.

There is no limitation on itemized deductions based on your Adjusted Gross Income. However, there are other limitations that may affect the contents of your Schedule A, such as State And Local Taxes (SALT), which is limited to $10,000.

When you prepare your return on eFile.com, if itemizing deductions is more beneficial for you, we will automatically prepare and generate the Schedule A which is used to report itemized deductions on your return. Click here to view a full list of 2020 forms and schedules, such as Schedule A, that may be helpful when filing your taxes.

Check out more tax deductions you may qualify to claim on your tax return. Don't overlook eligible tax credits.