Are you scratching your heads over taxes? Our tax code is so complicated and changes every year. But, filing your taxes is something you can’t avoid.
One of the first decisions you’ll have to make is whether to take the standard deduction or to itemize your taxes. While the standard deduction has increased again for 2019 and is quite attractive for many people due to its simplicity and time savings, you may get more money back by itemizing your deductions. Here are some reasons to consider itemizing on your return.
Are You a Homeowner?
If you are a homeowner, there are a couple of ways you can benefit from itemizing deductions. Property taxes and mortgage interest paid are deductions that you can take on your return. There are some limitations and guidelines that may affect the amount you can claim, but this is one of the most significant advantages to homeownership when it comes to taxes. The standard deduction works for people who don’t own a home or have a mortgage. If you do, itemize deductions to gain the tax advantage.
Do you Donate to Charity? You Can Itemize Deductions
If you make large donations, or even sizable regular donations, you can write these off on your taxes. Depending on the amounts you donate, this can add up to quite a deduction, and save you money on your taxes. Remember to keep your receipts and proper records of your donations, since you will need to maintain backup information for itemized deductions for five years.
Did You Have a Lot of Medical and Dental Expenses?
These are also allowable as itemized deductions… with a provision that you can only deduct those that are greater than ten percent of your adjusted gross income. For most people, their medical and dental expenses are less than ten percent, but if you’ve had a bad year with a lot of out of pocket medical expenses, you can deduct them.
Do You Own a Business? Itemize Deductions!
If you own a business, business expenses can be deducted from your gross income, to reflect the cost of running your business. Many people itemize deductions, even if they have a home-based business. These are filed on what’s called a Schedule C form. It’s essential to understand the guidelines for claiming these expenses. Equally important, you must maintain proper records of all expenses, and keep them on hand for five years.
Sound Confusing? JStevens Accounting Can Help!
If you need help sorting through the maze of itemized deductions, consider hiring a full-service bookkeeping and tax accounting firm, such as JStevens Accounting. We’re here to help you. We can tell you if it’s better to take the standard deduction or to itemize, and we’ll prepare your tax return for you!