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:
- Medical expenses – only to the extent they exceed 7.5% of your adjusted gross income.
- Taxes – this includes state and local taxes, real estate taxes, and personal property taxes.
- Interest you pay – such as home mortgage interest, certain points, and investment interest. This is limited to $10,000.
- Charitable gifts – this includes gifts of both cash and property.
- Casualty and theft losses in Federally declared disaster areas – above certain thresholds.
The standard deduction is indexed annually for inflation.
In 2021, each married taxpayer over age 65 or legally blind receives an additional $1,350 deduction. Singles receive an additional $1,700 deduction.
So will you itemize? Probably yes if you are:
- Own a home
- Have high medical bills
- Donate a lot to charity
Contact us for more information.