Understanding the Difference between taking the Standard or Itemized Deduction


Article Posted on 02/18/2022


Taxpayers have two options when completing a tax return, take the standard deduction or itemize their deductions. In general, we will pick the greater of the two. Here are some details about the two options: 

  

Standard deduction 

The standard deduction amount increases slightly every year and varies by filing status. The standard deduction amount depends on the taxpayer's filing status, whether they are 65 or older or blind, and whether another taxpayer can claim them as a dependent. Taxpayers who are age 65 or older on the last day of the year and don't itemize deductions are entitled to a higher standard deduction. 

Here is a chart for the 2021 Standard Deductions for each filing status: 

Filing Status                                       Standard Deduction       Additional amount if over 65 or blind* 

Single                                                   12,550                                  1,700 

Married Filing Separately            12,550                                  1,350 

Married Filing Jointly                     25,100                                  1,350 

Surviving Spouse                             25,100                                  1,350 

Head of Household                        18,800                                  1,700 

*The additional amounts are per spouse and will be doubled if a person is both over 65 and blind. 

Not all taxpayers can take a standard deduction which can be explained by your tax preparer if that applies to your special situation.   

  

Itemized deductions 

Taxpayers choose to itemize deductions by filing Schedule A. Itemized deductions that taxpayers may claim include: 

State and local income or sales taxes (right now this is limited to $10,000) 

Real estate taxes 

Personal property taxes such as vehicle taxes 

Home mortgage interest 

Mortgage insurance premiums on a home mortgage 

Personal casualty and theft losses from a federally declared disaster 

Gifts to a qualified charity 

Unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income 

Please submit documentation of each itemized deduction to your tax preparer so they can determine which deduction will be greater for you. 

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