Should You Itemize or Use Standard Deductions?

Last updated on April 7, 2014

If you have been paying taxes for years by either itemizing your deductions or using the standard deduction, you may want to calculate your taxes using both the methods. That is because with years, your financial conditions and other circumstances that affect your taxes change. It may be that you bought a property, got married, started a business or had a baby. These changes will alter the way you pay taxes. If there have been major changes in your life, you must certainly review which one of the two methods will provide you the most benefits.

In most cases where taxpayers do not own property, run a business or have made investments other than to their retirement fund, it makes better sense to use the standard deduction. The standard deduction for 2013 is $6,100 if you’re single or filing separately from your spouse. The standard deduction for those married and filing jointly is $12,200.

If you run a business or if you have deductions that exceed the threshold of standard deduction for a year, then you may itemize deductions. When you itemize your return, remember that you must have legitimate documentation to support your claims of expenses. It is best to ask for and keep receipts of the larger expenses that you will want to deduct.

Even though it takes much time and effort to itemize deductions, many times, you can save a lot in taxes using it.