Tax Tip: Should You Take the Standard Deduction or Itemize?
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Mackon/iStock/Thinkstock(NEW YORK) — When filing your tax return, is it better to take the standard deduction, or to itemize?
“I would hope that most people itemize,” says Tom Wheelwright, founder of the CPA firm ProVision. “My guess is a lot of people take the standard deduction.”
“It’s a really easy calculation, though, because you add up your itemized deductions and if they’re more than your standard deduction, you take itemized deductions,” he adds.
Wheelwright’s guess is right: more than 60 percent of taxpayers take the standard deduction. But why?
“Most people don’t itemize, particularly young people just starting jobs. They don’t have enough qualified expenses to itemize, so they take the standard deduction,” explains Kevin McCormally, of Kiplinger’s Personal Finance magazine.
If you own a home, however, that unlocks the door for itemizing.
“Once you can claim your homeowners insurance and mortgage deduction, you can also itemize your charitable deductions, the medical expenses if you had a lot, personal property tax on your car,” says Kathy Pickering, executive director of The Tax Institute at H&R Block.
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