Filing Status Explained: Which One Applies?
From Tax Guide.
Tax Guide · Arab, Alabama
Standard Deduction or Itemizing: Which Is Right?
Should you take the standard deduction or itemize? How the choice works, what you can itemize, and how Alabama treats it on the state return.
The short answer
Should I take the standard deduction or itemize?
You generally choose whichever gives you the larger deduction, and most people take the standard deduction because it is bigger than their itemized expenses.
The standard deduction is a fixed amount that the IRS sets each year based on your filing status. Itemizing means adding up specific expenses, such as mortgage interest and charitable gifts, on Schedule A. You use one or the other, not both.
Because the standard deduction has grown large, fewer people itemize than in the past. But the answer changes year to year with your life, so we do not assume.
What counts
What can I itemize on my tax return?
Common itemized deductions include mortgage interest, certain state and local taxes, charitable donations and medical expenses above a set share of your income.
Each category has its own limits, and some are capped. For example, the amount of state and local taxes you can deduct is limited by law, and medical expenses count only after they pass a threshold based on your income. Casualty and theft losses are allowed only in narrow cases.
You will need records to back up what you claim. The documents checklist shows what to gather.
- Home mortgage interest and property taxes
- State and local income or sales taxes, up to a limit
- Gifts to qualified charities
- Medical and dental costs above the income-based threshold
- Certain casualty losses from federally declared disasters
Comparing
How do I decide between the standard deduction and itemizing?
Add up your possible itemized deductions and compare the total to the standard deduction for your filing status.
If itemizing is higher, it usually lowers your taxable income more. If not, the standard deduction is simpler and needs no receipts. Homeowners with a mortgage, people with large medical bills and generous givers are the groups most likely to come out ahead by itemizing.
Your filing status changes the standard deduction, so the tipping point is different for a single person than for a married couple. A new homeowner might also see a change; see our checklist for new homeowners.
| Standard deduction | Itemizing |
|---|---|
| Fixed amount set by the IRS | Total of your actual eligible expenses |
| No receipts needed | Records needed for each item |
| Simple and quick | More work, sometimes a larger deduction |
| Most common choice | Often chosen with a mortgage or large expenses |
Amounts and limits change, so we compare them each year.
Alabama
What about the Alabama return?
Alabama has its own deduction rules, and your federal choice can affect your choice on the state return.
Alabama lets you deduct federal income tax paid, and it has its own standard deduction and itemizing rules that do not always match the federal ones. In some cases a person takes the standard deduction federally but itemizes for Alabama, or the reverse, so we check both. See how to file taxes in Alabama.
Other items
Are there deductions I can take even if I do not itemize?
Yes, some adjustments to income are available whether or not you itemize.
These are taken before the standard-or-itemized choice and can include certain retirement account contributions, student loan interest and self-employment items. They are not part of Schedule A. Eligibility and limits vary, and the IRS sets them each year.
How we can help
Let us run the numbers both ways
Melton Tax Services prepares individual and family returns and can compare the standard deduction and itemizing for your situation.
Our income tax preparation service covers the federal and Alabama returns. Call 256-586-4635 or visit our contact page. We serve Arab and the surrounding area.
Answers
Questions about standard or itemized
Can I take the standard deduction and itemize too?
No. You choose one or the other on the federal return. One related rule: married people who file separately generally must both itemize or both take the standard deduction.
Do I need receipts if I take the standard deduction?
You do not need receipts for the standard deduction itself, though you should keep records for any credits or adjustments you claim.
Is mortgage interest always deductible?
Only if you itemize, and within limits that depend on the loan. If your total itemized deductions are lower than the standard deduction, the interest does not help.
Can I change my mind after filing?
You can amend a return in many cases, but the choice can be locked in for some married filers. Call us before you file so you choose well the first time.
Do charitable gifts help if I take the standard deduction?
Traditionally not, because charitable gifts have been an itemized deduction. Recent law changes may allow limited exceptions, so we confirm the current rules each year.
Read next
Related reading
Tax Checklist for New Homeowners
From Tax Guide.
What Documents Do I Need to File Taxes?
From Tax Guide.
How to File Taxes in Alabama
From Tax Guide.
Income Tax Services
A service Melton Tax Services provides.
Melton Tax Services
Questions about your taxes or your business?
Our team in Arab is just a phone call away, and we are glad to talk it through with you.