When filing your taxes, you have the option of taking a standard deduction (no math involved) or itemizing your deduction (provided you have the documentation). This helps you reduce your total tax bill, so maximizing the amount is key.
If your itemized deductions total more than the standard amount, which is $5,700 for a single person and $11,400 for a married couple filing jointly, then itemizing is the way to go.
The standard deduction for a married couple sounds like a high amount but if you own your own house, for example, the mortgage interest deduction will likely be your biggest ticket item toward exceeding that threshold.
Besides mortgage interest, there are a number of other items that could potentially be large and will help you meet that amount. Medical deductions, if they exceed 7.5 percent of your AGI, can be deducted.
Take note, next year the floor for medical deductions will be 10 percent instead of 7.5 percent, so be sure to get in the habit of always keeping your documentation. Other items might be property taxes, state and local income taxes or state and local sales taxes, car taxes, etc. A complete list can be found on a Schedule A.
What about charities? Charities that are tax deductible will count toward your itemization. Even non-monetary donations, such as clothes or furniture, will count, as long as you have your documentation. This is typically a receipt from the organization or canceled check.
Though getting organized and wading through all the paperwork might be time-consuming or cumbersome, it's usually worthwhile for taking the itemized deduction. If you don't have anything substantial to deduct, then the standard amount is for you. Time is money. It's best to take a few minutes to do a quick run-through your situation to see if you qualify for itemizing. Making the most of your deduction means more money in your pocket .
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