Do you have all the documents needed to prepare your taxes this year? Do you still have some lingering questions? A common question I get asked is the difference between standard and itemized deductions. Deciding which option is best for you involves comparing the total amount of your itemized deductions with the standard deduction for your filing status. This guide should help you out.

Standard Deduction

The basic standard deduction for 2021 for each filing status:

  • Married filing joint and surviving spouse:  $25,100
  • Head of household:  $18,800
  • Single:  $12,550
  • Married filing separately:  $12,550

For individuals who can be claimed as a dependent by another taxpayer, the standard deduction is the greater of:

  • $1,100 or
  • The individual’s earned income plus $350 up to $12,550

Taxpayers who are blind or are age 65 and older get an additional standard deduction.

  • Married persons and surviving spouses:  $1,350 each
  • Heads of households:  $1,700
  • Single:  $1,700

A taxpayer who is age 65 and older and is blind receives an additional standard deduction for each status. 

Some taxpayers are not allowed to take the standard deduction:

  • A married taxpayer filing separately cannot take the standard deduction if the spouse is itemizing their deductions. Both must itemize or both must use the standard deduction.
  • A taxpayer who files a tax return for a period less than twelve months must itemize.
  • A taxpayer who is a nonresident alien or a dual-status alien must itemize.  However, if this taxpayer is married to a US citizen or resident alien, he/she may be able to take the standard deduction.

Itemized Deductions

Taxpayers may claim the following deductions if they choose to itemize:

  • Unreimbursed medical and dental expenses that are greater than 7.5% of their adjusted gross income.
  • Taxes
    • State and local income or sales tax
    • Real estate taxes
    • Personal property taxes
    • Total of the taxes is limited to $10,000
  • Interest
    • Home mortgage interest if the proceeds from the loan are used to purchase, renovate, or remodel the home.  If the loan proceeds are used for another purpose, such as paying off credit cards, the interest is not deductible.
    • Mortgage insurance premiums on the home mortgage
  • Gifts to a qualified charity
  • Personal casualty and theft losses from a federally declared disaster

Are you still confused about standard vs itemized deductions? Or do you have more questions you need to be answered before you can complete your taxes for 2021? Please reach out. I’d love to help.

Judith Ackland has more than 26 years of experience in accountancy and financial planning, including seventeen years as a CFO of a diverse business. She started Crystal Financial in 2010 to help a wide array of individuals, families, and business owners better understand their finances and how good financial management could help them achieve their goals. Judith has an MA in Professional Accountancy from the University of Nebraska at Lincoln as well as a Certified Public Accountant Certificate and a Certified Financial Planner designation.

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