Taxpayers can choose between standard deduction and itemized deductions from "summary" of Income Tax Fundamentals 2021 by Gerald E. Whittenburg,Martha Altus-Buller,Steven Gill
Taxpayers have the option to select either the standard deduction or itemized deductions when calculating their taxable income. The standard deduction is a fixed amount that the IRS allows taxpayers to deduct from their income without having to provide any documentation of their expenses. This deduction is available to all taxpayers and is based on filing status, such as single, married filing jointly, or head of household. On the other hand, itemized deductions require taxpayers to list out specific expenses they incurred throughout the tax year, such as mortgage interest, medical expenses, and charitable contributions. Choosing between the standard deduction and itemized deductions depends on which option will result in a lower taxable income. Taxpayers should calculate their deductions using both methods to determine which one will provide the most significant tax benefit. If the total of their itemized deductions is higher than the standard deduction amount, they should choose to itemize. However, if the standard deduction amount is higher, they should opt for the standard deduction instead. It is essential for taxpayers to keep accurate records of their expenses throughout the year to ensure they are maximizing their deductions. The decision to choose between the standard deduction and itemized deductions can have a significant impact on a taxpayer's tax liability. For some individuals, the standard deduction may be the more straightforward option, as it does not require detailed record-keeping or documentation. On the other hand, itemized deductions can result in a lower taxable income for those who have significant expenses that qualify for deductions. Taxpayers should carefully consider their financial situation and consult with a tax professional if they are unsure which deduction method to choose.- Taxpayers have the flexibility to choose between the standard deduction and itemized deductions when calculating their taxable income. By understanding the differences between these two options and carefully evaluating their expenses, taxpayers can make an informed decision to minimize their tax liability. It is crucial for taxpayers to stay informed about changes in tax laws and regulations to ensure they are taking advantage of all available deductions.
