Ask the COMMUNITY expert Taxes NEWS
SHOULD I ITEMIZE? A LOOK AT ITEMIZED TAX DEDUCTIONS AND HOW THEY CAN HELP IN 2020
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o I need to itemize? Knowing when and how to itemize your expenses is key to maximizing your tax situation and your federal refund. Here’s a look at itemized tax deductions and how to know if itemizing is your best option before the filing deadline which this year is July 15th. What are itemized tax deductions? An itemized tax deduction is any expense you can use to reduce your taxable income and, by extension, your federal tax bill. When you choose to itemize, all deductions you qualify for are reported on Schedule A of Form 1040 and subtracted from your adjusted gross income (AGI) to lower what you owe. Ultimately, the amount itemized tax deductions will reduce your 2019 federal income tax depends on your tax bracket and filing status. Do I itemize or claim the standard deduction? Knowing when to itemize vs. when to claim the standard deduction means understanding which option makes the most impact on your federal tax bill. Because you can only claim one or the other, it’s crucial
to know your tax situation and weigh both choices carefully before completing your federal return. The standard tax deduction The standard tax deduction is the easier of the two, as it’s a set amount based on your filing status. For the 2019 tax year – for which you file in 2020 – standard deductions amount to: $12,200 if you file as Single or Married filing separately $18,350 if you file as Head of Household $24,400 if you file as Married filing jointly or as a qualifying widow or widower with a dependent child And because the standard deduction is adjusted each year for inflation, those numbers will climb to $12,400 (Single & Married filing separately), $18,650 (Head of Household) and $24,800 (Married filing jointly) for the 2020 tax season. Itemized tax deductions When the amount of allowable expenses is more than the lump sum standard deduction, itemizing your taxes is likely the best way to go. A seasoned tax preparer can help you sort through your expenses,
Ryan Dodson has a Masters in Accounting from North Carolina State University. He worked in public accounting with Deloitte and Arthur Andersen. He and his wife Tiffany own and operate Liberty Tax Service. 405 East Dixie Drive•Asheboro, NC 27203 (336) 629-4700 12 | asheboromagazine.com
