Question: Should I itemize my deductions?
Answer: If you have enough personal expenses, you may save income taxes if you itemize your deductions. Compare your itemized deductions with the standard deduction for your filing status, and use the larger of the two.
Itemized deductions include the following:
1) Medical expenses – only to the extent they exceed 10% of your adjusted gross income. Different rules apply for age 65 and older.
2) Taxes – this includes state and local taxes, real estate taxes, and personal property taxes.
3) Interest you pay – such as home mortgage interest, certain points, and investment interest.
4) Charitable gifts – this includes gifts of both cash and property.
5) Casualty and theft losses – above certain thresholds.
6) Unreimbursed job expenses – including job hunting expenses.
7) Miscellaneous expenses – such as investment expenses and certain legal and accounting fees.
The standard deduction is indexed annually for inflation. Here are the standard deduction amounts for 2014 and 2015.
|Joint returns & surviving spouses||$12,400||$12,600|
|Married filing separately||$6,200||$6,300|
|Head of household||$9,100||$9,250|
In 2014, each married taxpayer over age 65 or legally blind receives an additional $1,200 ($1,250 in 2015) deduction. In 2014, singles receive an additional $1,550 ($1,550 in 2015) deduction.