Should You Itemize?
Should you itemize?
Itemized deductions phased out for high-income individuals
How to bunch expenses to get the most out of itemizations
Should you itemize?
Itemize if your allowable deductions exceed your standard deduction
Filing status Standard deduction Single $3,900 Head of household 5,750 Married, filing jointly 6,550 Married, filing separately 3,275 Unless you own a home (and therefore have substantial property taxes and mortgage interest), it's probably best to take the standard deduction
You also might want to itemize if
- You or a dependent had serious medical payments not reimbursed by insurance
- You suffered a major theft or casualty not reimbursed by insurance
- you gave a lot to charity
- You have significant job-related expenses
Only 25 percent of taxpayers itemize
Itemized deductions phased out for high-income individuals
If you itemize and have a high income (AGI over $100,000) you will lose some of your itemized deductions
Part of 1990 tax increase
Good example of how ridiculously complex our tax code can become just to squeeze out a little more money
How to bunch expenses to get the most out of itemizations
For most taxpayers, items are deductible in the year of payment
To maximize use of both the standard deduction and itemized deductions, bunch your deductible payments into those years when you plan to itemize
Here's what you might want to do if you plan to itemize this year
- Double your payments to a charity and skip next year's contribution
- Prepay your HMO premiums which are deductible as a medical expense
- Prepay your property taxes for next year -- if they've already been assessed
You can't prepay too far in advance
Trying to deduct the next five years worth of HMO payments, even if actually paid, won't be fully deductible