Itemizing on one’s taxes might take longer than taking the standard deduction, but the extra effort often pays off. NY1’s Money Matters reporter Tara Lynn Wagner filed the following report.
To itemize or not to itemize? That is the question… on line 40 of the 1040 form. Taxpayers get to choose between filing a Schedule A or taking the standard deduction, which is $5,700 for a single person and $11,400 for a married couple filing jointly. The standard deductions sound substantial, but itemizing may come up with more money.
“If your sum total of all your itemized deductions are going to exceed that number, you should itemize your deductions,” says Alan Dlugash, a partner of Marks Paneth & Shron LLP.
While $11,400 might sound high, it is actually a pretty easy threshold to reach. Experts recommend starting with big-ticket deductions like mortgage interest and then keep digging.
“You should have a simple list of the major items, and just do a quick ‘looksie’ to make sure,” says Dlugash.
“Personal taxes, taxes on your automobile, sales taxes are deductible as an option, if they’re bigger than your income taxes, which is also deductible; medical deductions,” says Mark Steber of Jackson Hewitt Tax Service.
One can also itemize charitable contributions, which range from clothes donations to support for a relief effort or contributions to the church collection bin. However, experts warn that those itemizations need proof.
“Anything — $10, $20, $30 — needs to be documented, so either a canceled check or you need to get a letter from the charitable organization showing you made this contribution,” says Vincent Cervone, the principal of VRC & Associates. “If you don’t have this letter, you cannot take this deduction.”
The important thing in general is to keep track of receipts, and there are many strategies for doing so. Those who want to use the least amount of effort can just toss their papers in a shoebox or manila envelope.
Cervone takes it one step further and recommends his clients get fancy supplies, like a notebook and a stapler.
“And each day you have a receipt for some sort of business expense, you staple it onto that page,” says Cervone. “At the end of the year when you come see me, I add all the pages up. I total it at the end of the year, and it’s done. It’s easy.”
It may not be as easy as taking the standard deduction, but experts say the bigger effort will likely mean a bigger refund.
“Standard’s easy. Itemized is hard, but itemized in many cases is much larger,” says Steber.
Click here to watch the video: http://brooklyn.ny1.com/content/ny1_living/money_matters/136150/don-t-agonize-when-it-comes-time-to-itemize