Tips for When to Itemize Your Taxes Strandlife Wealth

If you’re finding yourself with a tax headache and you’re sick of staring at complicated rules and numbers, you are not alone! Taxes are always a pain. But we have some advice to help you decide if and how you should itemize your taxes this year.

The Biggest Consideration: The Standard Deduction

The standard deduction for tax year 2023 is $13,850. Basically, this is the amount you can reduce your taxes by if you want, no questions asked.[1] So, for example, if you made $100,000 in 2023 and you take the standard deduction, you will be taxed on $86,150 (which is $100,000 minus $13,850). In most cases, the standard deduction is what people take off their income taxes every year.

There are several circumstances where a person can’t take the standard deduction, but the most common is because you are married but claiming separately and your partner is itemizing. If your marriage partner is itemizing and you’re filing separately, you must itemize, and you cannot take the standard deduction.[1]

The IRS recommends taking the standard deduction unless you can deduct more than $13,850 by itemizing, or you can’t take the standard deduction because you don’t qualify. For someone who has a lot of potentially deductible expenses, it may be worth it to look into whether you could save more by itemizing or taking the standard deduction.

Options for deductions

So, how do you manage to deduct more than the standard deduction? Here are some ways that you can increase your itemized deductions:

  • If you do charitable work, keep receipts for travel costs and other associated costs. Those can really add up.[2]
  • Keep receipts for any other charitable donations you make over the course of the year. These can also be used on your itemized taxes.[2]
  • There are certain circumstances where you can deduct your state sales tax from your federal taxes.[2] This isn’t always true, and it varies from state to state, but it is something that is worth discussing with a tax professional.
  • You can report gambling losses as a part of your tax return, and they can be deducted from your total earnings for the year.[2]
  • Child and dependent care can also be added to your itemized return. There are limits to how much you can deduct in this category, but it is something that parents should look into.[2]

Taxes can be a pain. But you don’t have to do them alone! If you aren’t sure if your tax strategy is fully comprehensive, consider reaching out to one of our professionals today for a complimentary review of your finances.

 

Sources:
[1] https://www.kiplinger.com/taxes/tax-deductions/602223/standard-deduction
[2] https://www.kiplinger.com/taxes/602075/most-overlooked-tax-breaks-and-deductions


This blog is designed to provide general information on the subjects covered.  Pursuant to IRS Circular 230, it is not intended to provide specific legal or tax advice and cannot be used to avoid penalties or to promote, market, or recommend any tax plan or arrangement.  You are encouraged to consult your personal tax advisor or attorney.