Do you know the difference between an itemized deduction and a standard deduction?
Deductions reduce the amount of taxes you owe when filing a federal tax return. That said, there are two types of deductions: The standard deduction, based on an IRS schedule, or the itemized deduction. Knowing which type of deduction is best for you can save you significant money.
Standard deduction. The amount of money you may deduct from your 2019 income. It may be found on the first page of the 1040, or you can use the IRS ITA (Interactive Tax Assistant app to learn what your standard deduction is. The ITA will ask which tax year, date of birth, if married, are you filing a joint return? Whether you provided your own support for that tax year; were you in an eligible natural disaster from 2017 through February 2020.
Itemized deduction. There are many expenses that the IRS allows to be deducted from your income when determining how much tax is owed to the federal government. These expenses are individually listed on schedule A of the form 1040. Wondering what qualifies as an eligible deduction? You can use the IRS ITA or check with your tax preparer. Some expenses that are allowed to be deducted are: mortgage interest and mortgage insurance expense, eligible charitable contributions, education expenses,unreimbursed medical and dental expenses, personal taxes paid during the tax year and personal casualty or theft losses from a federally declared disaster.
If you don’t have a tax preparer and need to figure out whether to itemize or use the standard deduction for your tax filing, visit www.personaltaxprep.com to be connected to an experienced tax preparer who can answer all your tax deduction and other tax questions.