Will I itemize my deductions or will I take the standard deduction? This is a common question an individual may ask their tax attorney or their CPA when preparing and filing their 1040 individual income tax return. The article below, drafted by a Denver tax attorney at The McGuire Law Firm discusses how to make the decision to itemize or take the standard deduction, and what you need to do if you itemize your deductions.
Of course, you likely want to make the decision that allows you to pay the least amount in tax. Thus, the option with the largest deduction is likely to lead to you paying the least amount of tax. You may want to add up all of your itemized deductions and then see if these amounts will be larger than the standard deduction for the appropriate tax year.
Examples of itemized deductions are:
– State and local income tax or sales tax, but you cannot claim both income taxes and sales tax
– Mortgage interest, which is likely reported on From 1098
– Real estate taxes
– Charitable gifts via cash, check or other
– Casualty or theft losses
– Unreimbursed medical expenses (this deduction is limited based upon your adjusted gross income)
– Unreimbursed employee expenses
Once you have listed all of the allowable itemized deductions, if they are larger than the standard deduction you will likely want to itemize your deductions. You will itemize your deductions by filing Schedule A with your 1040 Individual Income Tax Return.
Because you will be comparing your itemized deductions to the current year standard deduction, it is important to know what the standard deduction is for the current year. The standard deduction can change depending upon your filing status. The standard deduction amounts for the 2013 tax year are as follows:
– Single $6,100
– Married Filing Joint $12,200
– Head of Household $8,950
– Married Filing Separate $6,100
– Qualifying Widow(er) $12,200
There are also other issues to consider when deciding whether to itemize or take the standard deduction. For example, if filing married filing separately, both spouses must be able to itemize their deductions or neither is allowed to itemize their deductions. Thus, if one spouse itemizes and the other spouse takes the standard deduction, the Internal Revenue Service is likely to disallow the itemized deductions from one spouse, and this will likely result in an increase in tax, and additional tax assessment. Further, itemized deductions can be phased out when individuals reach certain income levels, meaning that the amount of your deductions is lessened as you reach certain thresholds of income.
A Denver tax attorney at The McGuire Law Firm can assist you with your tax questions, matters and issues. Our goal is to educate our clients and create long term relationships. Thus, whether you are looking for individual tax planning, assistance with a business tax issue or you have an issue or problem with the Internal Revenue Service, a tax attorney at The McGuire Law Firm can assist you.
Contact The McGuire Law Firm to schedule your free consultation with a Denver tax attorney! Offices in Denver and Golden Colorado.