When Does Itemizing Make More Sense Than the Standard Deduction?

Over the past couple of weeks, we have covered what itemizing is and which expenses may qualify.

The real question becomes: When is itemizing the better option?

Most taxpayers take the standard deduction. Itemizing makes sense when your total eligible expenses add up to more than the standard deduction for your filing status.

How Itemizing Works

Itemizing is when you add together multiple deductible categories and compare the total.

First, you total all eligible itemized expenses at the allowable amounts for the year. Next, compare that number to the standard deduction. If itemizing is higher, it may be the better choice. If it is not, the standard deduction usually wins.

When Itemizing Is More Likely to Help

Itemizing is most common when several of these apply in the same year:

• Mortgage interest from owning a home

• State or local taxes (state income tax or sales tax, property tax, within current limits)

• Charitable contributions, especially if you give consistently or in larger amounts

• Higher-than-normal medical expenses in a given year

Each category on its own may not exceed the standard deduction. But when two or more stack together, the total can add up.

That is why itemizing is situational. It depends on how your year looks as a whole, not just one expense.

An Important Filing Rule to Know

If you are married filing separately, both spouses must use the same deduction method.
If one spouse itemizes, the other must also itemize, even if the standard deduction would otherwise be better.

The Bottom Line

If your combined eligible expenses exceed the standard deduction for your filing status, itemizing may be beneficial. If they don’t, the standard deduction is usually the simpler and better choice.

In very limited situations, choosing a lower deduction can make sense due to how other tax rules interact, but those cases are highly specific and typically require working with a tax professional to evaluate properly.

Each week, I share a clear, bite-sized tax insight straight from my continuing education so you can stay informed without sifting through tax changes.

Next week, we discuss what you need to track if you want to itemize.

Thanks for reading,

Brandy Sparkman, EA

I’ll keep learning so you can stay focused on what you do best.

See you next week for another Tax Minute.