Standard Deduction vs. Itemized Deductions

Jon Weaver Tax Central

As taxpayers filed their taxes in 2018 many who itemized deductions in years past found the standard deduction to be more advantageous. The reason for this was two-fold. The new tax laws greatly increased the standard deduction and greatly reduced or eliminated many of the itemized deductions. This one-two punch resulted in about 10% of taxpayers itemizing in 2018 versus 30% in 2017. This trend is expected to continue in 2019.

You don’t have to keep special records to claim the Standard Deduction. You just take it. Itemized deductions are a different animal because there are numerous expenses you must be able to back up with proper documentation.

The Standard Deduction depends on your filing status. There are five filing statuses available. The following list shows the 2019 Standard Deduction that goes along with each status. You get an additional amount if you are at least sixty-five years old or blind.

  1. Single = $12,200
  2. Married Filing Jointly = $24,400
  3. Married Filing Separately = $12,200
  4. Head of Household = $18,350
  5. Surviving Spouse = $24,400

Itemized Deductions also depend on your filing status. There are some pitfalls such as detailed record-keeping requirements, disallowance of certain expenses and possible Alternative Minimum Tax adjustments. Some of the Itemized Deductions that have been modified by the new tax laws include:

  • The maximum deduction for SALT (state and local taxes) is $10,000 if Married Filing Jointly
  • The maximum deduction for SALT is $5,000 if Married Filing Separately
  • The floor for medical deductions is 10% of AGI (adjusted gross income)
  • 2% miscellaneous deductions have been practically eliminated

Either way you decide to go, Standard Deduction or Itemized Deductions, the final result is a reduction of your taxable income which leads to a lower tax bill.

 

Joe Wright CPA PLLC provides the information in this blog as a general guide. Tax laws are extremely complex, and every taxpayer is unique. Some or all of this information may or may not apply to you. We provide simplified situations to clarify some of the major aspects and highlights of the topic at hand. Some of the language used is casual and may be misconstrued. Please make an appointment with us soon to discuss your particular circumstances.