The age old question: “Should I itemize or take the standard deduction on my income taxes. Taking a look at these requires you to do your taxes both ways, but it can save you thousands of dollars. People that earn over $75,000 a year usually itemize their deductions, but with lower interest rates on home mortgages; “is this wise?”
$11,900 is offered to married couples filing jointly and $5,950 is available for singles as a standard deduction. Every person can expect this deduction, so you need to get more than this to consider itemizing.
A married couple filing jointly on their taxes that has a $150,000 mortgage with a 3.5% interest rate would have paid $9,250 in taxes and interest. Therefore the standard deduction would give them $2,650 more than itemizing. If that couple were in a 28% tax bracket, they would have earned $742 more using the standard deduction.
People used to count on this deduction a “No Brainer”, but then again interest rates were much higher, so the deduction was larger. That is why you should analyze whether would be best in your situation. There are so many things to consider that you should consult a tax specialist. If you can save $700 then why not pay a tax specialist $200 for advice.
You have to add all your itemized deductions to make sure that it is actually beneficial. For instance you would add home office, medical, charitable contributions, losses and other things together to make up your itemized deduction. If that is more than $11,900 for a married couple or more than $5,950 for a single person, then you should probably itemize.