Standard and Itemized Deductions Compared
Whether you're running a small business out of your garage or checking in from 9 to 5 at the office, there's likely something you've done throughout the year that could be deducted from your tax return. However, this can be tricky if you don't have all the info going in. Should you go the easy way with the IRS standard deduction? Should you ensure that every pen, chair, and mile of gas is itemized and accounted for? Which choice will net you the most on your return? Below, we've compiled some of the most common deductions from a wide range of situations and compared how you can take them out of your total taxable income for the current tax year.
Tax Deductions Compared
There are many IRS deductions that can be claimed when filing individual income taxes. These are claimed on different IRS forms and schedules, including IRS Schedule 1, Schedule A, Schedule C, and more. Instead of worrying about which forms are required, file your taxes on eFile.com - the eFile Tax App chooses and fills out the many needed forms based on your answers to simple questions. Get IT done on eFile.com: IT is Income Taxes.
Some deductions available are:
We have broken down some of the IRS deductions available to taxpayers into three categories in the table below. This table is for those wondering what deductions can be claimed when you take the standard deduction or itemize your deductions. This applies to all taxpayers filing Form 1040; if you are an individual taxpayer with wage or salary income as your primary income, for example, this information is for you. As an employed person, you likely have income from your job with certain deductions already taken out of your paycheck for you, like retirement and health insurance. When you file your taxes, you can then deduct either the standard deduction or you can itemize your deductions.
In addition to that, you can also make adjustments to income if you have other expenses or deductions, such as student loan interest payments or HSA contributions. The table below summarizes which deductions you can take in addition to the standard deduction or itemized deductions you claim.
Penalty on early savings withdrawal
Yes
Claim
Yes
Expenses for rental properties not for business
Yes
Claim
Yes
Expenses for rental properties for business
Yes
Yes
Self-employed health insurance
Yes
Yes
If you are not sure which deductions you qualify for or how to claim them, simply enter all your income, expenses, and account contributions into your eFile account and all the deductions will be claimed for you based on your qualifications.
When you claim your primary deduction method, you can either use the standard deduction or itemized deductions. The standard deduction is a set amount determined by the IRS and changes year-to-year. You do not need to do anything special to claim this except mark it on Form 1040 which eFile will do for you.
If you have the expenses below, it may benefit you to claim itemized deductions instead of the standard deduction:
Once you select your primary deduction method, you can then use Schedule 1 - generated by eFile - to claim additional adjustments to income or above-the-line deductions. eFile will also help you claim expense deductions for your business, rental property, farm, and any capital losses.
Tax Deductions Explained
A deduction in tax terms is a portion or amount taken away from your total taxable income. Since the IRS and states tax most forms of income, it benefits individuals to have less taxable income so that they pay less taxes. For example, a single person with $50,000 in income for the year may be qualified to take $13,500 in deductions based on their situation. Instead of being taxed on their full $50,000 of income, they instead only face taxes on $36,500 of their income.
To get an idea of your taxes, use this IRS tax calculator which includes deductions.
Certain deductions may be deductible up to a percentage while others may be fully deducible or 100% deductible. For example, self-employed individuals can deduct 100% of the cost of many business expenses, such as office supplies.
Deducting an amount from your income may move you into a lower tax bracket. The more deductions you have, the lower your tax bracket and the less taxable income you have. To lower your taxes or get more money back, try these five simple tips:
- During the year, move money into deductible savings accounts or spend it on qualifying, deductible expenses - keep track of this as you manage your finances.
- Use any of these 15 free tax calculators to better understand different aspects of your personal situation before you file.
- Set up your eFIle account and add all your itemized deductions - eFile will automatically choose the standard or itemized deduction method based on which benefits you the most.
- Get all your forms together and in order so you do not miss adding all your deductible information, like contributions to deductible savings accounts.
- Work through all the sections in your eFile account to be sure you answer any applicable questions that way tax credits and deductions can be applied to your return.
How do you know which deductions you can take? How do you maximize your deductions and tax savings? What complicated IRS and state forms do you need to fill out in order to claim deductions? We at eFile.com have the answers to all these questions: simply use online tax filing software and get all your forms taken care of. eFile calculates deductions, tax credits, and other tax savings for you so you save the most money. Get your taxes done with ease and save money on tax preparation fees if your return is not free. All eFile users start for free with no commitment!
Yes, I'd Like to Start Free
During the year, follow this simple checklist to get all your forms together. Make IT less taxing: bring your forms to us and let the eFile Tax App do the hard work for you. Tax deductions are one of the most effective ways to save money on taxes; combine these with credits and you may get your biggest tax refund yet.
TurboTax® is a registered trademark of Intuit, Inc.
H&R Block® is a registered trademark of HRB Innovations, Inc.