Itemize or Standard Deduction, You Don't Have to Have a Home to Itemize

Sometimes high earners can itemize deductions, even if they don't have mortgage interest or real estate taxes, high medical payments, or extremely high unreimbursed business expenses. The standard deduction is $5,800 (2011) for a single person, and if you paid $6,000, lets say in State Taxes, you can qualify to file using itemized deductions.

The best way to choose is to take the highest deduction. However, if you are doing your own taxes, you may not realize which is the highest deduction, so perhaps you may want to prepare your taxes both ways. And if it's close, you might want to check with a tax professional, and or read below what the IRS has to say on the matter.

Usually if you are close, a professional can help you locate additional and legal deductions which could be to your benefit. There are over 100 new tax laws EVERY year, and even tax professionals have to refer back to their software to remember ALL and each of the details of new and changed tax codes.


Standard Deduction vs. Itemizing: Seven Facts to Help You Choose

Each year, millions of taxpayers choose whether to take the standard deduction or to itemize their deductions. The following seven facts from the IRS can help you choose the method that gives you the lowest tax.

1. Qualifying expenses - Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. If the total amount you spent on qualifying medical care, mortgage interest, taxes, charitable contributions, casualty losses and miscellaneous deductions is more than your standard deduction, you can usually benefit by itemizing.

2. Standard deduction amounts -Your standard deduction is based on your filing status and is subject to inflation adjustments each year. For 2011, the amounts are:
Single $5,800
Married Filing Jointly $11,600
Head of Household $8,500
Married Filing Separately $5,800
Qualifying Widow(er) $11,600

3. Some taxpayers have different standard deductions - The standard deduction amount depends on your filing status, whether you are 65 or older or blind and whether another taxpayer can claim an exemption for you. If any of these apply, use the Standard Deduction Worksheet on the back of Form 1040EZ, or in the 1040A or 1040 instructions.

4. Limited itemized deductions - Your itemized deductions are no longer limited because of your adjusted gross income.

5. Married filing separately - When a married couple files separate returns and one spouse itemizes deductions, the other spouse cannot claim the standard deduction and therefore must itemize to claim their allowable deductions.

6. Some taxpayers are not eligible for the standard deduction - They include nonresident aliens, dual-status aliens and individuals who file returns for periods of less than 12 months due to a change in accounting periods.

7. Forms to use - The standard deduction can be taken on Forms 1040, 1040A or 1040EZ. To itemize your deductions, use Form 1040, U.S. Individual Income Tax Return, and Schedule A, Itemized Deductions.