January 27th, 2010

2009 tax advice is in the forefront of many readers’ minds.  There’s nothing quite as stressful as trying to fill out that annual tax return.  There’s also nothing more frustrating than filing your taxes, only to find out you could have saved thousands of dollars.

Failing to itemize when you are eligible to do so is one way that a lot of people waste money.

Before you decide whether or not to itemize, you need to know the standard deductions.  If you choose the standard deduction, you won’t need to fill out IRS 1040 Schedule A.

Married filing jointly – $11,400

Head of Household – $8,400

Single – $5,700

Married filing separately – $5,700

If you own a home, the easiest way to see if you are better off itemizing your deductions is to look at your home mortgage interest paid and your property tax payments.

Your lender will typically send you a statement every year that indicates how much interest and property taxes you paid during the year.  Use this as a guideline. If your interest is greater than the standard deduction for your filing status, fill out schedule A.

Other deductions are only available for those that itemize.  Among them are charitable donations, medical expenses, casualty and theft losses, and unreimbursed employee expenses.

There are some people that have to itemize, and so this decision is made for them, including:

Taxpayers filing married filing separately when your spouse itemizes

Non Resident Aliens

Those that file a short year return because of a change in tax year

US Citizens that can exclude income from US Possessions

Those that feel lost in the tax world are not alone.  Those that qualify for itemization or that aren’t comfortable filling out their own tax returns should seek the assistance of a qualified tax professional.

Source:

IRS