You may have itemized your tax deductions in the past if you are, for instance, a homeowner. But now, you may benefit from taking the standard deduction if the new standard deduction amount for your filing status is more than your itemized tax deductions. According to the IRS about 90% of tax filers now take the standard deduction due to some tax benefits going away under Tax Reform passed in 2017.
If you’re not sure which is the better option this year, check out our Standard vs Itemized Tax Deduction Interactive.
In just five quick screens, you’ll understand the changes in the standard deduction and itemized deductions, and you’ll get an estimate of your deductions based on inputs. The tool also tells you if you may claim standard vs. itemized and makes recommendations for end-of-year tax moves you can make to increase your itemized deductions.
Should I take the standard vs. itemized deduction
Are you debating on whether to stick with the standard deduction or go for the itemized deduction route? Which will offer the bigger tax advantage for you will depend on your circumstances. Below, we’ll give you an overview of what scenarios typically suit the standard or itemized deduction best.
When you should take the standard deduction
Navigating your taxes can seem like a daunting task, but we’re here to help. When deciding whether you should take the standard deduction vs. an itemized deduction, it really comes down to what deductions you’d qualify for.
The standard deduction is a set amount based on how you file your taxes, with additional benefits for those who are 65 and older or visually impaired. The current standard deduction is:
- $13,850 for single filers
- $13,850 for married, filing separately
- $20,800 for heads of households
- $27,700 for married, filing jointly
The IRS adjusts the standard deduction amounts each year to keep up with inflation, so each year, you’ll likely need to reexamine your expenses to decide which approach is right for you if you do have itemized deductions like home mortgage interest and property taxes. Tax year 2023 is the most inflation adjustments have been increased in decades (7.1%) so you may find that the standard deduction is more than your itemized deductions for tax year 2023 and that it’s more beneficial to claim it.
Put simply, opting for the standard deduction makes the most sense when itemized eligible expenses don’t surpass the standard deduction amount. If you’re considering taking the standard deduction, comparing eligible itemized deductions such as mortgage interest, medical expenses, and charitable donations come into play when making this tax filing choice.
Typically, if your standard deduction is more than your itemized deductions then the standard deduction is likely the better option.
When you should take the itemized deduction
So, when are you supposed to itemize deductions? Well, if your eligible expenses – like medical costs, mortgage interest, or charitable donations – add up to more than the standard deduction amount, itemizing your deduction might be the better option to lower your tax bill if the eligible expenses surpass the standard deduction. Sometimes there can be a situation where tax filers itemized deductions can equal the standard deduction($13,850 single and $27,700 married filing jointly). When that is the case, making a move like donating more to charity at the end of the tax year or making sure you don’t leave out charitable contributions at tax time can boost your itemized deductions over the standard deduction.
When you’re trying to figure out which types of expenses might qualify, make sure to read up on our overlooked deductions article.
You can use our standard vs. itemized deduction calculator to help provide more clarity. Plus, TurboTax asks you simple questions about your deductions and automatically calculates the tax benefit that gives you the best tax outcome(standard vs. itemized) based on your entries. You don’t need to know whether an expense is a standard deduction or an itemized deduction.
Itemized vs. standard deduction calculator
Check out our Standard vs Itemized Tax Deduction Interactive. In just five quick screens, you’ll understand the changes in the standard deduction and itemized deductions; you’ll get an estimate of your deductions based on inputs; it tells you if you may claim the standard vs. itemized deduction and makes recommendations for end-of-year tax moves you can make to increase your itemized deductions.
*Note, the Standard versus Itemized Interactive Calculator is for estimation purposes only and does not include all deductions.
What are the pros and cons of taking the itemized deduction?
Itemizing deductions on your tax return can be a game-changer for some people since it can further helps reduce their tax bill. But it’s not always as easy as it seems – understanding what itemized deductions are can help you understand whether you may be eligible for the standard deduction or itemized tax deductions. For instance, if you have a small amount of itemized deductions like personal property taxes on your car and no big ticket items like home mortgage interest, then you would already know that you will most likely take the standard deduction.
Itemized deduction pros
Opting to itemize your deductions over taking the standard deduction route can be a beneficial tax move. Unlike the fixed standard deduction, itemizing allows you to claim specific expenses like mortgage interest, medical costs, or large charitable donations, to name a few, potentially reducing your taxable income further if your eligible expenses surpass the standard deduction for that tax year. Plus, if you are close to the standard deduction, you can further maximize your deductions if you make sure you remember to gather receipts for additional itemized deductions that may bump you over the standard deduction.
Using tools like our standard versus itemized deduction calculator allows you to understand and estimate the deductions that apply to your unique circumstances so you know whether you can claim the standard deduction or if you can itemize your deductions. In addition, if you use the calculator before year-end, it may help you decide on some smart tax moves you can make before year-end to maximize your itemized deductions.
Itemized deduction cons
There aren’t any major drawbacks necessarily. Tax filers who have itemized deductions just have to gather more documents at tax time so they don’t leave anything out. For instance, homeowners should have their Form 1098 which indicates home mortgage interest paid, their property tax bill, state income or sales taxes paid, and acknowledgments from charitable donations. Don’t worry about knowing what constitutes an itemized deduction. TurboTax will ask simple questions about your itemized deductions without you having to know how they are classified. Our standard versus itemized deduction calculator also helps you understand what expenses are itemized deductions.
Itemizing requires you to gather more documents, so people may think the allure of a simpler approach with standard deductions may outweigh the potential benefits, but if your itemized deductions are over the standard deduction, it’s worth gathering a few more documents to save money. Our tax document checklist can help you easily gather your documents if you can itemize your deductions.
What are the pros and cons of taking the standard deduction?
When contemplating your tax strategy, understanding how each deduction affects your tax situation is important.
Standard deduction pros
A lot of people opt for the standard deduction on their tax returns for a handful of reasons. First, it’s a quicker process. Additionally, the standard deduction tends to increase annually for inflation, thanks to Congress, which in turn aims to reduce taxable income in relation to help tax filers.
The standard deduction varies depending on your filing status (single, married filing jointly, head of household) and is higher for individuals 65 or older and/or blind. Note that married couples choosing to file separately can’t take the standard deduction if their spouse chooses to itemize deductions; both spouses will have to
opt for the same approach—either itemizing or taking the standard deduction.
Standard deduction cons
Taking the standard deduction just because it’s easy can cause you to miss out on writing off expenses that could reduce taxable income further.
Choosing between standard and itemized deductions boils down to numbers. If your itemized deductions surpass the standard deduction, then go for it. If the standard deduction is more beneficial, take that route. If your standard deduction is basically the same as your itemized see if you have any itemized deductions that you are leaving out and that can possibly bump you over the standard deduction
Don’t worry about knowing how to figure out whether you can claim the standard or itemized deductions. No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.
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