It is tax time again. Everyone who does their taxes has a question or two. The question many ask is, "Do I need to take the standard deduction or the itemized deduction?" The answer is that you can choose either of the two.
The standard deduction is typically a fixed amount that will lower your taxable income. When you itemize, there will be many deductions that will add up. If these many deductions add up to more than the standard deduction, your accountant in Las Vegas should advise you to take the itemized deduction over the standard.
The standard deduction is a set dollar amount one can take to reduce their tax obligation. So, is the standard deduction good or bad? The answer is not straight forward. If the taxpayer is single and does not have many expenses, the accountant might encourage the taxpayer to take the standard deduction.
It will allow for the taxpayer not to have to save receipts for their expenses. If the Internal Revenue Service (IRS) audits the taxpayer, they will need to have these receipts available. Taking the standard deduction still offers relief to the taxpayer.
Is the standard deduction higher for seniors? That is a question many seniors have. The answer is yes. The standard deduction will change from year-to-year. As the deduction gets higher for those who are single and those who are married and filing separately, the standard deduction also increases yearly for seniors.
The itemized deductions for seniors would not increase. When you itemize deductions, you are telling the IRS what you did with your money throughout the year. The itemized deduction is only an excellent idea if your deductions are more than the standard deduction for your filing status and age.
Many have questions about the standard deduction and their income. Does income limit the standard deduction? That is can someone make six-figures a year and take the standard deduction? Yes, they can. The standard deduction is not limited to those who make under a certain amount. It is for anyone who does not have enough or more itemized deductions to take the itemized way of doing their taxes. For those who would prefer to take the itemized deductions over the standard, their deductions should be more than the standard deduction. That is many tax preparers will advise on it.