But individuals who spend a lot on medical care, mortgage interest, state and local taxes, charitable contributions or a variety of miscellaneous items generally are better off itemizing.
Even purchases might help out some filers at tax time this year, thanks to the deduction for state sales tax paid. When all of these expenditures exceed the standard deduction, you'll save on your taxes by filling out Schedule A along with your 1040.
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Itemizing ground rules
When you do itemize, there are a few things to keep in mind. First, not every dollar you spend can be subtracted from your income. In the medical category, if you are age 64 or younger, then only expenses that exceed 10 percent of your adjusted gross income (or AGI) can be deducted. If you didn't spend that much, then none of your costs are deductible.
The previous 7.5 percent AGI medical deduction threshold still applies to taxpayers age 65 or older for the 2016 tax year. For 2017, the threshold increases to 10 percent for taxpayers of all ages.
Separately, you have to reach a 2 percent-of-income threshold before you can use miscellaneous deductions, such as unreimbursed job expenses and investment and tax-preparation costs. There also are restrictions on how much in casualty losses you can deduct, as well as limits on the deductibility of very large charitable contribution amounts.
Filing status affects figures
Your filing status sometimes affects your deduction method and amount. Married couples who file separately, for example, must work together when it comes to deciding which deduction route to take. Even though each partner will fill out a separate return, if one spouse decides to itemize, the other must do so, too.
Similarly, if someone claims you as an exemption on his or her tax return, the amount of the standard deduction you can take on your own return may be limited.
Finally, your deduction decision isn't a lifelong commitment. As long as you meet the other guidelines discussed above, you can claim the standard deduction one year and itemize the next. Again, be sure to use the deduction method that gives you the lowest tax bill.
For more details on itemized deductions, see the instructions for Schedule A, Itemized Deductions. Standard deductions are discussed in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information.
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