Tax Tips 2017: Itemized Deductions vs Standard Deduction

Tax season is upon us. There are many generally known tax deductions and strategies, but there may be something that you are missing.

We here at Sonny & Company CPA will be putting out some tax tips to help you either reduce your tax liability or maximize your refund.

Itemize or Not?

Itemizing your deductions is best whenever your deductions are greater than the standard deduction. For example, many homeowners choose to itemize because mortgage-interest payments along with local property taxes and uninsured medical expenses often add to be more than the standard deduction.

The IRS has said the standard deductions for the tax year of 2016 is as follows:

  • $9,300 for heads of household
  • $6,300 for singles and married persons filing separate
  • $12,600 for married filing jointly

So, if you believe that you qualify for deductions that are greater than the standard deduction you will receive, then make sure you itemize everything you can to lower your tax bill.

If you do not believe you have enough deductions to surpass the standard deduction, then do not file a tax return to itemize deductions. It is more expensive to itemize deductions and you will save more by doing a simple return.

For those who do itemize, beware that deductions are limited are even phased out if your adjusted gross income for 2016 exceeds the following:

  • Single: $259,400
  • Married filing jointly or qualifying surviving spouse: $311,300
  • Married filing separate: $155,650
  • Head of household: $285,350

If you are still unsure if you should itemize or not, stay tuned for more tips or give us a call at (714)-533-2600 to schedule a free consultation to ensure you are making the right decision. 

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