Once again it is tax time, so we are here to help you maximize your net worth by minimizing your tax liability. A question that we often receive is “Should I itemize deductions on my tax return?” According to Government Accounting Office estimates, more than 2 million people overpay their taxes each year by not itemizing. Generally, you can save by itemizing—in fact, many people benefit from itemizing deductions when filing. Here are a few facts to help you decide if you should itemize to save:
According to the Internal Revenue Service, you should itemize if:
- You are married and filing a separate return and your spouse itemizes deductions;
- You are filing a tax return for a short tax year because of a change in your annual accounting period, or
- You are a nonresident or dual-status alien during the year. You are considered a dual-status alien if you were both a nonresident and resident alien during the year.
You may also benefit from itemizing your deductions on Schedule A (Form 1040) if you:
- Do not qualify for the standard deduction or the amount you can claim is limited;
- Had large uninsured medical and dental expenses during the year;
- Paid interest and taxes on your home;
- Had large unreimbursed employee business expenses or other miscellaneous deductions;
- Had large uninsured casualty or theft losses;
- Made large contributions to qualified charities, or
- Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled.
The following items can add up fast when itemizing, so be sure to keep accurate records of the following:
- Medical Expenses;
- Job Hunting Costs;
- Investment Expenses;
- Moving Expenses;
- State Sales Taxes on Purchases made for the Filing Year;
- Mortgage Interest;
- Points on Refinancing a Home Loan;
- Uninsured Casualty or Theft Losses;
- Real Estate Taxes;
- State Taxes Paid During the Year;
- Charitable Cash and Non-Cash Contributions;
- Investment Management Fees, and
- Tax Return Preparation Expenses.
These are only some of the most popular deductions that people claim. There are more deductions that can be itemized, so consider having a professional prepare your taxes. Remember tax return preparation is a miscellaneous itemized deduction!
At Henssler Financial Tax & Accounting Division we will be more than happy to help you make sense of your tax return since you have decided to itemize. For more information on itemizing deductions, please contact Henssler Financial Tax & Accounting Division at 770-426-9166 or e-mail us at experts@henssler.com.