To itemize, you need to track and report all of these expenses on Schedule A of your tax return. This can be time-consuming and requires meticulous record-keeping, but it can be worthwhile if your itemized deductions total more than the standard deduction amount.

​

Key Differences Between Standard Deduction and Itemized Deductions

• Simplicity vs. Detail: The standard deduction is straightforward and requires minimal paperwork. Itemizing requires you to gather receipts, keep records of expenses, and calculate totals for each category.

• Eligibility and Amount: The standard deduction is available to most taxpayers and is the same for everyone with the same filing status. Itemizing is available to anyone, but it’s typically beneficial only if your deductible expenses exceed the standard deduction.

• Limitations on Itemized Deductions: While itemized deductions can potentially lead to a larger reduction in taxable income, there are limits. For instance, the SALT deduction is capped at $10,000.

​​

Who Should Consider Itemizing?

Itemizing deductions is most beneficial for individuals who have significant deductible expenses. Here’s a quick guide to help you decide if itemizing might be right for you:

1. Your Itemized Deductions Exceed the Standard Deduction: This is the most basic rule. If your itemized deductions add up to more than the standard deduction for your filing status, you should consider itemizing.

2. You Have High Medical or Dental Expenses: If you have significant medical costs in a year—like surgeries, treatments, or ongoing care—it may be worth itemizing to deduct these expenses.

3. You Have Large Charitable Contributions: If you’re a philanthropist or make large donations to charity, you can deduct those contributions if you itemize. While the standard deduction allows for a deduction on charitable giving up to a point, itemizing may give you more room to maximize these deductions.

4. You Own a Home: Mortgage interest on your primary and secondary homes can be deducted when itemizing. This is one of the largest deductions for homeowners and can make itemizing more beneficial if you have a mortgage with significant interest payments.

5. You Live in a High-Tax State: State and local taxes (SALT), including property taxes, can be deducted, but this is capped at $10,000. If you live in a state with high income or property taxes, you may reach that cap quickly, making itemizing worth considering.

6. You Had a Major Life Change: Life events such as a natural disaster or theft may create deductible losses that make itemizing worthwhile.

 

Who Generally Can’t or Shouldn’t Itemize?

Not everyone should consider itemizing. Here are some common scenarios where the standard deduction is the better option:

• Low-Deductible Expenses: If your total deductible expenses are small (e.g., under the standard deduction amount for your filing status), itemizing won’t provide additional tax benefits.

• No Mortgage or Charitable Contributions: If you don’t own a home or don’t make substantial charitable donations, you may not have enough deductions to make itemizing worthwhile.

• High Standard Deduction Thresholds: In 2023, the standard deduction is fairly high, especially for those married filing jointly. For many taxpayers, this means that itemizing won’t yield a larger deduction unless they have substantial, qualifying expenses.

• Simplicity Matters: If you value simplicity and don’t have a lot of complex deductions to claim, taking the standard deduction is an easy way to minimize your tax burden without all the paperwork.

Whether to itemize or take the standard deduction depends on your tax situation. If your deductible expenses exceed the standard deduction, itemizing could save you more, but it requires more effort. For many, the standard deduction is simpler and effective. If you're unsure which option is best, contact us for personalized guidance.