Itemized vs. Standard Tax Deduction – Which One Should You Take?

Deductions and Credits

Every year you’re faced with one important tax question: should you itemize or just use the standard tax deduction? For some people this is an easy question, but for others who may be thinking about the difference for the first time, it can be a little confusing and intimidating. Obviously, the standard tax deduction is easier because it’s simply a fixed number set each year and you just have to write it down on your Form 1040. But if you think you may have tax deductions that go above and beyond the standard deduction it may make sense to itemize, even though it will require better record keeping and a little more work.

What Expenses Can be Itemized?

Itemizing expenses means you get to sort through a number of different categories and tally them up to come up with your total deduction number. Not everyone will have expenses in each category, but the most common expenses include:

  • Mortgage interest.
  • Charitable contributions.
  • Property taxes.
  • State and local income taxes.
  • Medical expenses that exceed 7.5% of your adjusted gross income.
  • Various miscellaneous expenses that exceed 2% of your income such as: union dues, tools and supplies needed for work, tax preparation fees, some legal fees, and many more.

Should You Itemize?

There’s no right or wrong answer and it really depends on your personal situation. To see if itemizing is beneficial you will have to crunch a few numbers, or if you utilize tax preparation software such as TurboTax it will let you know which method will save you the most money.

Generally speaking, if you had a year with a significant amount of out-of-pocket medical expenses, made large charitable contributions, had a casualty loss, or own a home with a sizeable mortgage and therefore interest payment, chances are you’ll want to look at itemizing.

One thing to note is there are some limits on itemizing deductions.  The amount of itemized deductions and personal exemptions you can take are normally phased out as your income rises. In 2010, however, those income limits have been repealed, and the recent tax relief act extends the repeal for two more years, through 2012.

2010 Standard Tax Deduction

  • Married, Filing Jointly    $11,400
  • Single   $5,700
  • Married, Filing Separately          $5,700
  • Head of Household       $8,400
  • Blind or over 65 and married – add:        $1,100
  • Blind or over 65 and single/head of household – add:     $1,400

Using the above numbers you can see where you need to be when itemizing to make that the more attractive option. As you can see, it isn’t all that difficult to go over the standard tax deduction amount if you are a relatively new homeowner. Even if just $800 of each mortgage payment goes towards mortgage interest you’re up to a $9,600 deduction, and if your annual property taxes are around $2,000 you’re already at $11,600, which is just above the standard tax deduction. That doesn’t even take into account any other itemized tax deductions you may have.

It pays to compare the two tax deduction methods as it could mean leaving money on the table. So, take a look at the expenses that might qualify and see if you’re missing out on any money.

Comments (48) Leave your comment

  1. Hi,
    I own a single family home that I rented the entire year in 2013.Thats the only home I own and am now living in some other rental apartment. I use taxact.com to fill my taxes.
    I am using the rent minus expense method which I think goes on Schedule E and not on Schedule A. Now I am on the section that ask questions and answers for the itemized deduction. Am I correct that I should not enter the mortgage interest and real estate taxes again in this part and its best to use standard deduction since I cant deduct the mortgage and real estate taxes in the itemized deduction.

  2. Can anyone please help? I am a Union Member and the contractor I work for pays my Medical Premium payment with my money as we have a total package of $35.00 per hour with $5.85 per hour of that going towards the medical premium by the hours I work per month, Can I deduct that medical Premium being that it is my money paying the premium but sent by the contractor. This premium payment is not reflected on my stub. .Hope you guys and gals can help?

  3. I received a 1099 for 2012 & will file a Sch C. I am writing off some expenses. I am filing Single and not claiming myself. claim the standard deduction. Upon completing my 2012 tax returns on page 2, where it list the the standard deduction, it only shows $950 and not $5950. Is this correct? Is it because I am writing off more than $5000 in expenses? Thanks CMJ

  4. I AM A HOME HEALTH AIDE , I GET MY PAPERWORK FOR MY JOB OFF THE COMPUTER I GOT LAST YEAR , IF I RENT TO OWN THIS COMPUTER CAN I TAKE IT OFF ON MY TAXES???

  5. My itemized deduction amount is larger than the standard deduction, but my refund amount remains the same regardless of the one I choose. Why is that?

    1. You may want to see a tax preparer to determine which filing method would save you the most money. Filing separetely may give you a smaller tax liability, but you would have to crunch some numbers to find out. One thing you should keep in mind is that if you file married filing separately, you can later amend it and file jointly, but you cannot make amends if you file jointly.

  6. Is medical insurance counted as a medical expense such as medicare premiums and supplement insurance premiums whenever you itemize?

  7. Hi, I have a child with development disabilities who attends a private special needs school where he receives speech therapy and occupational therapy and has classroom instruction by a special education teacher. May I deduct the school tuition and mileage under medical expenses? Thank you!

  8. I am retired..and thinking of buying a home..the realtor said I can claim the mortgage int.credit on a 140,000 hm and my refund would be 2000 a yr on int of 3.5. Is that true?

  9. we had to convert our home to a rental because of the housing market and relocating for employment. Is my net rental income calculated by subtracting the mortgage pmt. and other expenses from the collected rent? Is yhay what is considered to be ” net rental income ” ? Thanks, Befuddled

    1. Hi Dawn,
      Your net rental income is the rental receipts less the portion of your mortgage related to interest reported on form 1098, your property taxes, maintenance, depreciation etc, but if you change from personal use to rental at anytime besides the first of the year, you have to split the deductions between personal and business use so your deductions for the rental will be based on the amount of time that it was a rental and not your principal residence. The portion of interest and property taxes related to your property being your principal residence has to go on your itemized deductions. TurboTax will guide you through these entries, but I suggest that you use Premier.
      Thank you,
      Lisa Greene-Lewis

    1. Hi J,
      Yes you can deduct the amount paid for property taxes even if there are impounds.
      Thank you,
      Lisa Greene-Lewis

    2. Property tax?? I add my state’s to my mortage payment to credit union – as soon as I get property tax bill from state I send off to credit union for their configuration – I have never heard of “worked in” if it meant any other way

  10. After examine a few of the blog posts in your web site now, and I actually like your means of blogging. I bookmarked it to my bookmark web site record and will be checking back soon. Pls take a look at my web site as nicely and let me know what you think.

  11. I’m using turbo tax to do my taxes.
    Whether I take the standard deduction or itemize, my tax liability is 0 for both state and federal returns. In this case, should I just take the standard deduction versus itemizing?

    1. Oh i wanted to clarify. The reason why I’m asking is that I do have a lot to itemize …property tax and mortgage int. rates etc. (roughly $15000)
      but my income was very very low this year …less than the standard deduction.

      1. Hi,
        Make sure you also go through the tax program and try to see if you qualify for earned income tax credit if you have not already done so since this is a refundable credit. You may get a bigger tax refund.

        And yes that is most likely why you have 0 tax liability either way, but I would input the itemized deductions as the IRS receives a copy of your 1098 for the mortgage interest reported.

        Thank you,
        Lisa Greene-Lewis

  12. I filed with Turbo Tax and recieved confirmation that my tax was excepted on Jan, 21. I have not recived my refund that was to be on Feb.1 and when I check it tells me no information check back in one week. I filed itemized.

    1. Hi Kay,
      The IRS is experiencing processing delays due to changes in their system for taxpayer’s protection.
      Please see this update just received from the IRS regarding the issue.
      Hello everyone,

      The IRS has updated it’s Where’s My Refund site with additional FAQs: http://www.irs.gov/newsroom/article/0,,id=254102,00.html
      We want to quickly share any updates we receive through IRS because we know many of you are still waiting for your refund status and estimated direct deposit date. We really appreciate your patience in this really frustrating time and we’ll continue to provide updates as we receive them from IRS.

      Thank you,
      Lisa Greene-Lewis

  13. I am a returning turbo-tax member, I was wondering:
    I worked as a certified home health aide and was told that my uniform/scrubs, class, books, license fees, and gas/miles on my car are deductable because they were tools i needed to do my job, is this true?

    1. Hi Ashley,
      Yes that is true. They would be deductible as an employee business expense. If you are an independent contractor then you would deduct them as a self-employed business expense on Schedule C. TurboTax will guide you through the process.
      Thank you,
      Lisa Greene-Lewis

    1. Hi Shelia,
      The standard mileage rates for operating your car for medical purposes are:

      -19 cents per mile from January 1–June 30, and

      -23.5 cents per mile from July 1–December 31, 2011.
      Thank you,
      Lisa Greene-Lewis

  14. When Turbo Tax asks if my medical expenses are over a certain amount, is it looking for what was billed or what I have paid out of pocket?

    1. Hi Warren,
      There are only a few hybrids that you can still receive a tax credit for, however it depends on the make and model. Many tax credits expired prior to 2011 once manufacturers sold their 60,000th model. There is also still a tax credit available for electric vehicles like the Chevy Volt or the Nissan Leaf. You can try our software under “Deductions and Credits”, “Cars and Other Things you Own” to see what models may qualify. Here is the link http://turbotax.intuit.com/

  15. 05-17-2011… I am a member of TurbboTax .. and have a question .. I was given all of my Dad goods .. as he passed May 4, 2011.. all shirts .. all pants .. all under garments .. all bathroom goods . .shaving kits(s) .. e-razors … towels ..

    27 – shirts…22 – pants… 8 belts … under garments (4 new T-shirts new in package 5 new-in package)…

    8 – Winter coats .. 10 pairs of shoes .. 4 Boots

    What can I use …as I have given all to Goodwill ?

    1. That a way to work the system. So you were a student that didn’t want to work while you were in school, so you applied for and received unemployment. You spent $2361 of the free money you received from the government and taxpayers because you are too lazy to work and attend school and you want to itemize some school supplies that were essentially given to you by us, the American tax payer? Give me a freaking break. You must be part of the Occupy Wall St crowd.

      1. Hand:
        You obviously don’t understand how unemployment works. It’s not welfare. Federal and local taxes aren’t used to pay unemployment. Employers pay unemployment to the state on behalf of their full-time employees automatically as part of their benefits. You can only collect unemployment benefits if you are laid off or forced to reduce your work hours by your employer or medical reasons, and not if you are fired or resign/quit.

        If you get unemployment, it means that you had worked for at least a year prior to the start of your unemployment benefits, which again are paid for by your former employer. The amount of benefits that you get is based on the previous year’s income, and it will be about half of that. It does count as income and you should have been able to withhold 10% of each check for federal and state taxes.

        School supplies are generally not tax deductible unless they could only be bought from the college/university and they were required for the class, i.e. lab course fees for consumables (lab coat/goggles can be bought elsewhere so they are not deductible) or readers printed by the university or third party specifically for a certain class/professor.

        If you had a student loan from which you paid your supplies, the interest that you paid on that load would be used to reduce your taxable incomet.

      2. WOW! Unemployement is something we pay into when we work. If you DONT work you cant get unemployement and you can only get unemployment if you’re fired or laid off and you’ve worked long enough. I’m a stay at home mom/student and I cant go get unemployment because I’ve never been fired I only quit. I’m not on welfare or any other government help. Before you attack people know your facts, its people like you that make true conservatives, like myself, look like morons with their heads stuck up their butts.

  16. I need help! I am a student, who rrecieved unemployment all year. I made 10,225.00 in unemployment, I spent 2361.00 on school supplies, how do I itemize? Do I have to put each item in or the whole total? LOST!

  17. I fell into the category of the Feb 14th. If my taxes are rejected can I file my 1098 T retirement info and claim my disabled brother who has been with me all year whom i take care of. Instead of an amendment.

  18. I put in my mortgage interest into turbo tax and it told me I should take the standard deduction. I didn’t go in and delete the mortgage interest but did say yes to take the standard deduction. So since i took the standard deduction that means I did not itemize correct? So my refund shouldn’t be held up because of the new tax laws, correct?

  19. If I have a very limited income and only $600 with held every year, do I need to itemize or can I take a standard deduction and get my $600 back?

      1. Hi Raymond,
        Unfortunately the ability to deduct property taxes paid on your home as an additional standard deduction expired.
        Thank you,
        Lisa Greene-Lewis

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