Itemized Deductions vs. Standard Deduction 2023

IRS Form 1040 Schedule A https://www.irs.gov/forms-pubs/about-...

You’ve probably heard that once you have a mortgage or if you start a side hustle, you’ll be able to drastically reduce how much you owe in taxes, BUT while those do count as deductions you might still be better off taking the standard deduction which means those things won’t change how much you owe at all.

Let’s start with the basics, what is the standard deduction? The standard deduction is the amount set forth by the IRS that anyone who files taxes can use to reduce their taxable income. The exact amount is published each year and will vary depending on your filing status, for 2021 if you’re filing as single the standard deduction is $12,550. So, if you made $50,000 and you took the standard deduction, you would only pay a federal income tax on $37,450.

The standard deduction is super simple because all you have to do is subtract the amount that corresponds to your filling status from how much money you made. And because of how much the standard deduction was increased back in 2017, most taxpayers will be better off choosing the standard deduction.

Now for the itemized deduction, as the name implies you are breaking down every deductible expense from the past year, adding them up and subtracting that from your income. But what expenses are considered tax deductible? For that you’ll need to look at IRS Form 1040 Schedule A and its associated instructions.

Example deductions:
• Medical
• State taxes, up to $5,000 (double for married filing jointly)
• Interest expenses (like interest on a mortgage)
• Gifts to charity

Once you have your total added up, it’s a simple decision. What number is higher, your itemized deduction or the standard deduction? If the two are pretty close, then I’d choose the standard deduction because you’re never going to have to ever prove anything where with an itemized deduction you may need to prove where those deductions came from.

#taxes #taxdeduction #irs

🔥Join this channel to get access to perks🔥    / @apennypinchersguide  

🔥Support us on Patreon and get exclusive perks🔥   / apennypinchersguide  

☑️Love our content? Subscribe!☑️    / @apennypinchersguide  
☑️Our website: https://apennypinchersguide.com/

Follow us: Facebook: https://www.facebook.com/APennyPinche...
Instagram:   / apennypinchersguide  
Twitter:   / candrbooks  

DISCLOSURE: We are not financial advisers. The ideas presented in this video are for entertainment purposes only. Although the information is researched and vetted beforehand, it may not be up to date at the time of viewing. Please do your due diligence and research on the topic. You (and only you) are responsible for the financial decisions that you make.