How Do I Know If I Need To Itemize My Deductions On My Taxes?
When filing my taxes, itemizing my deductions is never required, it is optional. Whether or not I itemize my deductions depends largely on whether or not that itemization will help to reduce my tax liability more than using the standard deduction. There is only one exception to this rule, and that is if I will file my taxes as Married Filing Separate.
The first step in figuring out whether I need to use the standard deduction or the itemized deduction is to determine what status I am filing under. I can choose Single, Married Filing Separate, Married Filing Joint, or Head of Household. If I am legally separated from my spouse, or I find that filing my taxes separately from my spouse helps my tax liability, then the deduction method I use on my taxes must be the same method that my spouse uses. I cannot use a different deduction if we are filing separately from each other. So if my spouse uses an itemized deduction, then I must also use the itemized deduction on my taxes, even if it makes my tax liability more than it otherwise would have been.
If we are filing as Married Filing Joint, Single, or Head of Household then the government gives us two types of deductions to choose from and we are allowed to choose the method that we want to use. In most cases, we will choose the deduction that gives us the best refund of money. The way to know if itemizing my deductions will lower my taxes is to figure out how many deductions I have to claim. If the amount of my itemized deductions exceeds my standard deduction then I will want to itemize my deductions to get the lowest possible tax liability. In 2010, the standard deductions for Single or Married Filing Separate taxpayers will be $5,700 for Married Filing Joint taxpayers it will be $11,400 and for Head of Household taxpayers it will be $8,400 as found on www.irs.gov.