When Itemized Deduction is Better Than Standard Deduction ?


itemized deductionsThere are two ways an Individual can claim deductions under Internal Revenue Code while filing tax return- either by claiming standard deduction or the intemized deduction. If you can claim standard deduction or itemized deduction , itemized deduction option ( on schedule A of Form 1040 ) will logically be better if it gives you more deduction than the standard deduction .

Major itemized  deduction are :

Under itemized deductions, a tax payer can deduct

  1. his/her medical and dental expenses
  2. unreimbursed employee business expenses,
  3. certain payments of taxes,
  4. interest,
  5. contributions to charities ,
  6. miscellaneous expenses.
  7. certain casualty and theft losses

As you know the maximum itemized deduction is fixed and also based on your adjusted gross income , itemized deduction may  be reduced or phased out if the adjusted gross income is more than the following threshold ( For tax year  2016 )

  • Single – $259,400
  • Married filing jointly or qualifying widow(er) – $311,300
  • Married filing separately – $155,650
  • Head of household – $285,350

But there are cases, when the option for standard deductions are not available !

When claiming itemized deduction is the only option ?

In following situation , you can not opt for standard deduction even if you wish. So only option as far as claiming deduction is concerned is the itemized deductions. These situations are :

  • You are a married individual , filing as married filing separately and your spouse itemizes deductions.
  • you file tax return for a period of less than 12 months because of a change in your annual accounting period.
  • You are  a nonresident alien or a dual-status alien during the year not married to a us citizen.
  • An estate or trust, common trust fund, or partnership;

When opting itemized deduction may be better ?

Apart from the two reason , itemized deduction is more or you are not able to claim standard deduction , it is better to choose itemized deduction in following situations :

  • You had large uninsured medical and dental expenses
  • You paid interest or taxes on your home
  • You had large unreimbursed employee business expenses or other miscellaneous deductions
  • You had large uninsured casualty or theft losses, or
  • You contributed to qualified charities


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