To obtain the highest refund as possible – or pay the IRS as little as possible – you’ll need to figure out whether it pays to itemize on your upcoming tax return or claim the standard deduction. Here’s how to make that call.
You’ll need to see if itemizing even makes sense. Figuring this out involves comparing your total itemized deductions to the standard deduction you’re entitled to claim. The standard deduction changes every year. For the 2020 tax year the standard deduction is based on your filing status:
Now, say you’re married and file a joint tax return with your spouse. If you own a home or have various deductions that total more than $24,800, then itemizing clearly makes sense. But if your deductions don’t exceed that total, then it pays to go with the standard deduction. It’s that simple.
Keep in mind that there are certain deductions you’re entitled to take even if you don’t itemize your taxes. These include:
Choosing whether to itemize versus claim the standard deduction is important, so run those numbers to see what makes the most sense. Getting that call just right could lower your tax debt or put a higher refund in your bank account this year.
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