Standard Deduction If you’re looking to file taxes immediately and want to forego the leg work of itemized deductions, taking the standard deduction is the quickest method. A standard deduction is just that, a standard amount that decreases your taxable income. The deduction will depend on your income, age, and several other factors.
The majority of Americans select the standard deduction route, likely for the ease involved. In fact, for the 2019 and 2020 tax years, 87.6% and 87.3% of Americans opted for standard deductions, according to the IRS. It is likely that some who selected the standard deduction could have fared better by itemizing their deductions.
Itemized Deductions While there are plenty of deductions available, you won’t qualify for them all. However, if you own a home, made large charitable donations or incurred costly medical expenses in 2022, you may be better off itemizing your deductions.
Itemized deductions include the amounts paid on property taxes, disaster or theft loss, real estate taxes, mortgage interest, state, and local sales and income tax, as well as the child and dependent care credit, medical and dental related expenses, and charitable donations. Filing itemized deductions take more time and require that you have the information to validate the deductions taken, but can be worth the extra effort in the end.
Which Deduction Is Best? For tax year 2023, the standard deduction is $13,850 for single taxpayers or married individuals filing separately. For married individuals filing jointly, the 2023 standard deduction is $27,700. If the standard deduction is less than the itemized deductions you qualify for, it may be worth the additional time and leg work it will take to itemize your deductions. If the standard deduction is more than itemized deductions will amount to, selecting the standard route is best. Most Americans choose this option, as it takes less effort, meaning taxes can be filed quicker.
Tax Professionals Can Help! Still not sure which option is best for you? Working with a qualified tax professional will help you maximize your benefits and ensure you’ve selected the appropriate tax strategy. Tax prep is often best left to the professionals, as they know the ins and outs of the tax world and can offer strategic planning, advice and expertise.
The experienced financial planning team at Shoebox Tax Prep is available to provide complimentary tax consultations for individuals and small businesses. Allow the pros to help devise a personalized tax strategy, prepare, and file your taxes.
Shoebox Tax Prep with offices in Sandy Springs and Atlanta Georgia will make the most out of the tax gold in your shoebox of receipts so you can happily focus on your business.
