The IRS allows most taxpayers a standard deduction which reduces their taxable income by a predesignated amount.
For some taxpayers, it may be more advantageous to "itemize" their deductions - to claim the amounts they actually spent in IRS allowable categories.
Common itemized deductions
This is a list of the most common deductions you may itemize:
Medical and dental expenses.
Taxes you paid: state and local income or sales taxes, real estate taxes, and personal property taxes.
Charitable contributions, gifts, and donations.
Investment interest.
Mortgage interest.
Note: Each category of deductions may be subject to limitations so you may not be able to deduct the full amount spent. Review the Schedule A instructions for more details on these limitations.
2021 Standard deduction
Married Filing Jointly: $25,100
Single & Married Filing Separately: $12,550
Head of Household: $18,800
If the total of your allowable itemized deductions exceeds the amount of the standard deduction, you may be able to reduce your tax liability by claiming the itemized deductions.
If you want to get into more details regarding the standard deduction, you should read the IRS recommendations on standard and itemized deductions.
This post may not contain a complete analysis of the tax issues discussed herein and does not represent official conclusions or advice regarding the matter.
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