Navigating Itemized Deductions with Ben Romine

In this article, we discuss the complexities of itemized deductions, which frequently puzzle individuals, who question the value of meticulously recording receipts and expenditures. 

We aim to provide clarity and guidance through the maze of itemized deductions, ensuring you navigate confidently.

Understanding the Basics:

Itemized deductions are expenses that you can subtract from your taxable income, potentially reducing the amount of tax you owe. However, whether it makes sense for you to itemize depends on whether your total deductions exceed the standard deduction set by the IRS.

For the current tax year, the standard deduction for a single person is $13,850, and for married couples filing jointly, it’s $27,700. If your total itemized deductions are within these amounts, taking the standard deduction is typically more advantageous.

Common Itemized Deductions:

So, what exactly can you deduct? Here are some common itemized deductions:

1. Medical Expenses: You can deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI). This includes things like doctor’s visits, prescription medications, and certain medical procedures.

2. State and Local Taxes: This includes deductions for state income taxes, property taxes, and personal property taxes (such as those on vehicles or boats). You can also deduct sales tax in place of state income tax if you live in a state without income tax.

3. Mortgage Interest: You can deduct the interest paid on your mortgage for your primary residence and any points paid at the time of purchase. However, this deduction is limited, so it’s essential to consult with a tax professional.

4. Charitable Contributions: Donations to qualified nonprofit organizations are deductible. Keep records of your contributions, including receipts or canceled checks. Non-cash donations, such as clothing or household items, are also deductible, but you’ll need to assign a value to them.

Maximizing Your Deductions:

To maximize your deductions, consider timing your expenses strategically. For example, if you know you’ll have significant medical expenses in a given year, try to schedule medical procedures or purchase necessary supplies before the end of the tax year.

Additionally, pay attention to smaller deductions that can add up over time. Keep track of expenses like job-related education, unreimbursed business expenses, and investment-related fees.

Final Thoughts:

Ultimately, deciding whether to itemize deductions requires careful consideration of your financial situation and expenses. If your total deductions exceed the standard deduction threshold, itemizing can lead to significant tax savings. However, if your expenses fall short, it’s best to take the standard deduction.

If you have any questions or need assistance navigating the complexities of itemized deductions, don’t hesitate to contact us at The Romine Group. We’re here to help you understand your taxes and maximize your deductions.

Remember, there are only two certainties in life: death and taxes, and we do taxes.