How Does Math Work For Federal Income Tax Standard Deduction Is Itemizing Tax Deductions Only For the Wealthy?

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Is Itemizing Tax Deductions Only For the Wealthy?

Many people are curious about the benefits of itemizing their tax deduction when they file their return. Although many feel that the option to do this really only applies to the rich, this is not the case. If you meet the criteria to do this, you may find it very beneficial. The following information will help you decide whether or not it’s right for you.

When we talk about tax deductions, it’s important to know that there are actually two main types, standard and itemized. A standard deduction is a specific amount of money that reduces your taxable income. Obviously, the smaller your income, the less tax you’ll pay.

The amount of the standard deduction that applies to you personally is determined by your state. The standard deduction for a single or married person filing separately is about five thousand dollars. A cohabiting couple or someone whose partner has died and who has children can deduct a little over ten thousand dollars. If you are a head of household, the standard deduction that applies to you is about seven thousand five hundred dollars.

The benefits of itemizing your deductions are that you can itemize some income that would normally be taxed as non-taxable. If you have enough expenses that fit into this category, you’ll definitely come out ahead by filing this way instead of just taking the standard deduction. What are some things that fit into this group?

One possible item that you can itemize as tax deductible would be any work-related expenses that you don’t get reimbursed for. For example, if you have to buy your own clothes or a uniform for work, you can itemize this expense on your tax return. Any other items you must purchase for your work that have not been compensated for also fit into this category and can be itemized. When you add up this expense at the end of the year, you might be surprised at how much money you can claim as a deductible.

Another expense, and the most frequently detailed, would be those associated with health care. If you have been suffering from a debilitating illness for a long time or are caring for a family member, you can qualify for a wide range of deductions. Some of the expenses that can be itemized include medications, therapy, treatments and any necessary equipment. Although many believe that this money is simply wasted, it doesn’t have to be.

To be eligible to itemize your deductions, there is no specified amount of deductions you must meet. A large expense may be sufficient. Make sure you do your homework. Each type of item that can be deducted is governed by different rules. However, if you spend enough money, you will be able to itemize the expense.

How can you decide whether or not to itemize your deductions? Do the math. Whichever option will get you the most money back is the one that’s right for you.

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