Itemized Deductions vs. Standard DeductionEvery taxpayer, every year, has the choice to either use itemized deductions, often called the "long form," or the standard deduction, often called the "short form." How do you know which form you should choose? How to Choose Between Using Itemized Deductions or the Standard Deduction In order to make this decision, you must understand the first rule of tax deductions: the bigger the deduction, the better. You always want to choose whichever deduction is larger between the itemized or the standard. More deductions means less taxes. Generally speaking, taxpayers who are homeowners will benefit from itemizing deductions, while renters are usually better off using the "short form" standard deduction. This is because homeowners pay mortgage interest and property taxes, which are both deductible on the itemized form, called Schedule A. However, that's not always true. Some renters do benefit from itemizing deductions. For example, renters who have a lot of work expenses, such as construction workers or traveling nurses. Look at these lists of work-related tax deductions. We have lists of tax deductions for many professions. Start by Knowing Your Standard Deduction If you are trying to decide between using itemized deductions or the standard deduction, a good place to start is by knowing your standard deduction. The standard deduction is based on your filing status as a taxpayer. Here are the standard deduction amounts for 2009:
Select the filing status that applies to you. If you're single, for instance, your standard deduction for tax year 2009 is $5,700. If you're married filing a joint return, you're starting with a $11,400 standard deduction. "Eyeball" Your Itemized Total Before Spending a Lot of Time and/or Money Filling Out Schedule A Now, to figure out a rough estimate of your itemized deductions, add up the following expenses during 2008:
If you are single and all of the above expenses add up to more than than $5,700, it's going to be worth itemizing your deductions on the Schedule A. Contact Pronto today and we'll help you itemize your deductions thoroughly and correctly. If, on the other hand, your standard deduction is more than your total itemized deductions, keep it simple and stick with the short form. If you are using the standard deduction, you may be able to do your taxes online for free. If you do choose to do your own taxes online, don't forget that we will check your short form for errors for only $15.
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