One of the first steps in tax return preparation is deciding whether to take the standard deduction or itemize all of your deductible expenses. Either approach will reduce the amount of your income subject to tax, potentially shaving thousands of dollars off of your bill, but each is intended for taxpayers in different financial situations. For most people, taking the standard deduction is the best move, although there are some good reasons to itemize.

What Is the Standard Deduction?

The standard deduction is available to every taxpayer, regardless of your income level or the types of purchases you made throughout the year. For single taxpayers and married people who are filing separate returns, the deduction is currently set at $12,000, while heads of households can deduct $18,000. Married couples filing joint returns can deduct $24,000 off of their taxable income.

When Should You Itemize?

Unlike the standard deduction, itemized deductions are based on your investments and how you spent your money. For instance, some mortgage interest payments and charitable donations are tax deductible, as are local property and sales taxes. If the total amount you spent on deductible expenses throughout the year was greater than the standard deduction amount, you’re better off itemizing expenditures on your tax return.

How Does the Tax Cuts & Jobs Act Affect Deductions?

One centerpiece of the Tax Cuts and Jobs Act of 2017 was doubling the standard deduction, while eliminating many of the most common itemized deductions. If you’ve always taken the standard deduction, this could mean a significant tax cut, but taxpayers who are used to itemizing should double-check before starting their tax return preparation. You might find that the new tax code makes taking the standard deduction the best approach to saving money.

With the help of Burch & Associates, tax return preparation doesn’t have to be stressful and confusing. With a team of experienced enrolled agents and a thorough understanding of the law, they’ll take the pressure out of filing your taxes and ensure you get every deduction you qualify for. Visit their website to learn more about their tax return preparation services, get more tax tips on their Twitter page, or call (402) 483-4791 to schedule an appointment with a member of their team today.