When It Pays to Itemize
The enhanced standard deductions that many taxpayers took advantage of on their 2009 tax returns -- for buying a new car or paying property taxes when they didn’t itemize -- are history. Without those extra deductions, more of your income may be taxed. So when you sit down to prepare your tax return for 2010, make sure you’re making the most of your write-offs when you choose between claiming the standard deduction and itemizing your tax-deductible expenses.
For 2010, the standard deduction is $5,700 if single or married filing separately, $8,400 if head of household with dependents, or $11,400 if married filing jointly. In addition, you can claim an extra $1,100 deduction for each taxpayer or spouse who is 65 or older or for taxpayers of any age who are blind. (A married person filing separately may not claim any standard deduction if his or her spouse itemizes on a separate return, even if the standard deduction would result in a bigger tax savings.)
You should claim the standard deduction only if it exceeds the amount you could claim by itemizing deductions. You may benefit from itemizing your deductions on Schedule A if you:
•do not qualify for the standard deduction;
•had large uninsured medical and dental expenses during the year;
•paid interest and taxes on your home;
•incurred large unreimbursed employee business expenses or other miscellaneous deductions, such as tax-preparation fees or investment expenses;
•experienced large uninsured casualty or theft losses; or
•made sizable contributions to qualified charities.
Although 70% of taxpayers claim the standard deduction, millions may be leaving money on the table because they don’t take the time to keep all the receipts and documentation that could add up to a bigger tax break than the standard deduction allows.