When filing tax returns, taxpayers can choose between taking the standard deduction or itemizing their deductions. The IRS allows you to select whichever option creates the greatest deduction, so you’ll want to add up any eligible itemized deductions before deciding whether or not to take the standard deduction.
In 2016, the standard deduction for single (or married filing separately) was $6,300. For married filing jointly, the standard deduction was $12,600. The standard deduction is higher for taxpayers who are blind or over the age of 65.
Eligible itemized deductions can include any of the following:
- Medical expenses
- Other taxes (property tax, state income or sales tax, personal property tax)
- Mortgage interest
- Charitable contributions
However, restrictions do apply when it comes to which of the above listed items qualify as deductions. For example, most taxpayers can only deduct medical expenses that exceed 10% of their adjusted gross income (AGI); for taxpayers over 65, you can deduct medical expenses over 7.5% of your AGI. Make sure you understand the specific requirements of each type of deduction before you calculate your itemized deductions. This will help ensure you accurately figure your itemized deduction and can make a correct assessment of whether or not itemizing your deductions is worth more than the standard deduction.
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