What is the standard deduction, and when does it make sense to take it instead of itemizing? This episode breaks down how the standard deduction works, what impacts the amount you can claim, and when itemizing may be worth a closer look.Ready to talk through your specific situation? Visit elevate-wealth.com and click Let’s Talk.
What is the standard deduction and why does everyone talk about it? Find out today on Elevate Wealth. Welcome to Elevate Wealth. I'm your host, Preston Wilkie. And today I'm with the president and CEO of Elevate Wealth Advisory, Deanne Rosso. Welcome, Deanne. Hey, Preston. Happy New Year. Happy New Year to you, too. So, Deanne, what is the standard deduction and when does it make sense to use it? Oh, that's a great question, Preston. So, the standard deduction, you can think about that as the first layer of income that the IRS gives us just to take for free. It's like an automatic coupon that lowers your taxable income. And most filers take it instead of itemizing their deductions, because for most people now, the standard deduction is higher than itemized deductions. And the amount that you get depends on your filing status and your age. Okay. So, when do I itemize? Oh, another great question. So, you would itemize when you have what are called itemized deductions that add up to more than the standard deduction. And what those things are, are things like state and local taxes, mortgage interest, charitable gifts, medical expenses that are over a certain threshold of your out-of- pocket expenses. You add all of those deductions together, and if those are more than your standard deduction, again depending on your filing status, then you would itemize those deductions rather than taking the standard deduction. Okay. So, and you know, another tip might be keeping track of those types of deductible expenses throughout the year. Maybe just keep a spreadsheet or something, a running list of those expenses. So, it makes it easy come tax time and you know whether or not all those things added together are more than your standard deduction or whether you should just go the simple route and take the standard deduction. That's great information, Deanne. Thank you. And for those of you tuned in, if you'd like help deciding whether the standard deduction or itemizing makes most sense for you, our team's happy to give you a hand. Visit elevate-wealth.com, click let's talk, and we'll see you next time.
