Do you itemize your tax deductions?<\/p>\n
This is a topic many people find confusing.<\/p>\n
Here is how it works.<\/p>\n
The government lets you earn a certain amount of income tax-free. (I know, isn’t the IRS awesome?)<\/p>\n
How much?<\/p>\n
Well, you have a choice.<\/p>\n
You can either take The Standard Deduction OR you can choose to Itemize Your Deductions.<\/p>\n
Naturally, you are going to pick whichever one offers you the most tax-free income.<\/p>\n
Let’s break it down:<\/p>\n
1) The Standard Deduction – This is a set amount of tax-free income the IRS is willing to give to you, based upon your filing status.<\/p>\n
For example, in 2022, if you file as married filing jointly, you can earn $25,100 of income tax-free.<\/p>\n
2) Itemize Your Deductions – This is when you choose to deduct a number of expenses allowed by the IRS.<\/p>\n
What kinds of expenses does the IRS allow you to deduct if you choose to itemize?<\/p>\n
The IRS has a form for this (called Schedule A), but from my experience, the three most common ones people use are mortgage interest, local taxes (including property) and charity.<\/p>\n
The concept is fairly simple.<\/p>\n
Let’s say you’re filing as married filing jointly, and your mortgage interest, local taxes and charity total $26,000 – you would likely choose to itemize your tax deductions since $26,000 is greater than $25,100 (your standard deduction).<\/p>\n
There are certain laws that apply (such as local tax being limited to $10,000), but that is the basic idea behind the standard vs. itemized discussion.<\/p>\n","protected":false},"excerpt":{"rendered":"
Do you itemize your tax deductions? This is a topic many people find confusing. Here is how it works. The government lets you earn a certain amount of income tax-free. (I know, isn’t the IRS awesome?) How much? Well, you have a choice. You can either take The Standard Deduction OR you can choose to […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"yoast_head":"\n