tstorm.png
Monday June 17th, 2019 7:32PM

It may be time to stop itemizing your taxes

By The Associated Press
Related Articles
  Contact Editor

Around this time of year, many taxpayers begin the annual ritual of pondering The Big Question: Do I take the standard deduction or spend time hunting for receipts and filling out extra forms to itemize? The decision largely boils down to whether itemizing will reduce your taxable income more than the flat, no-questions-asked standard deduction will, thus saving you money.

But a major plot twist may make the issue even more vexing for some this tax season: The standard deduction nearly doubled in 2018 to $12,000 for single filers, $18,000 for heads of household and $24,000 for joint filers.

Generally, that means that a married couple filing jointly, for example, would now need to cobble together at least $24,001 in various tax deductions for itemizing to lower their tax bill more than taking the standard deduction would.

It's a change that's sure to leave some longtime itemizers wondering whether the standard deduction is actually the thriftier option this year. Here are four things tax pros say could indicate that it's time to stop itemizing and take the standard deduction.

1. YOU DIDN'T PAY A LOT OF MORTGAGE INTEREST

The tax deductions for mortgage interest and property taxes have been boons to itemizers because they often add up to more than the standard deduction, says Andrew McCue, a certified public accountant at Weiss & Company in Glenview, Illinois. But if you didn't pay much in property taxes, had a small mortgage or were at the tail end of your mortgage (where the payments were mostly toward principal and not much interest), these itemized deductions may not save you as much this year as the standard deduction could.

"If those are adding up to a substantial amount, that's when you want to look at it and look at the standard deduction," he says.

2. YOU USED THE DEDUCTION FOR STATE AND LOCAL TAXES

The federal deduction for state and local income taxes is popular among itemizers, but a new cap of $10,000 for joint filers this year means some people may be better off taking the standard deduction instead, McCue says.

But even with the cap in place, taxpayers who also have deductible mortgage interest might still save more by itemizing this year, he says. "In Illinois, it's not hard for me to say I've got $6,000 of property taxes, but that varies a lot state to state," he says. Add in another $6,000 for mortgage interest, and "just with those two items, you're at the standard deduction for an individual," he says.

3. YOU DIDN'T DONATE A LOT TO CHARITY

Charitable donations are a well-known tax deduction for itemizers, but if this year's higher standard deduction gets you a bigger tax break, the tax-deductibility of your gifts may be a moot point, says Kasey Pittman, a CPA at Newport News, Virginia-based accounting firm PBMares.

"They're not going to see that added benefit from donations, and I think once they figure that out, they'll learn to plan their donations and to be more thoughtful about what year they give in and such," she says.

For example, giving $5,000 to a favorite charity once every five years could save more money than giving $1,000 every year for five years. That's because "bunched" donations, when combined with other itemized deductions, could get you over the higher standard-deduction threshold and make itemizing worthwhile financially, Pittman says.

4. YOU DIDN'T HAVE HUGE MEDICAL EXPENSES

In general, unreimbursed medical expenses that are more than 7.5 percent of your adjusted gross income may be deductible if you itemize, says Travis McMurray, a CPA at accounting firm Blackburn, Childers & Steagall in Tennessee. But the higher standard deduction could still be a better option.

"Quite honestly, you'd have to have a pretty significant medical event for that to kick in, or your income must be pretty low," he says.

This article was provided to The Associated Press by the personal finance website NerdWallet. Tina Orem is a writer at NerdWallet. Email: torem@nerdwallet.com.

RELATED LINKS

NerdWallet: Free Income Tax Calculator

https://nerd.me/tax-calculator

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Personal Finance
© Copyright 2019 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
No Christmas cheer for stock markets after Mnuchin call
Stock markets around the world remained under pressure Monday
8:29AM ( 11 minutes ago )
The Latest: Indonesia tsunami death toll climbs to 373
Indonesia's disaster agency says the death toll from the weekend tsunami has climbed to 373. The agency says that 128 others are missing in the disaster, with 1,459 injured
8:15AM ( 24 minutes ago )
Official: Suicide bomber, gunmen attack government building
An Afghan official says a suicide bomber exploded his car outside the martyrs and disabled persons department building before gunmen entered where they were battling local police
8:13AM ( 26 minutes ago )
Associated Press (AP)
Mattis leaving Pentagon sooner than planned, Shanahan tapped
Mattis' stepped-up departure shifts focus to acting Pentagon chief, plans for permanent replacement
5:38AM ( 3 hours ago )
White House: Trump would accept less money for border wall
White House official says it's 'very possible' partial shutdown will stretch into next year
5:29AM ( 3 hours ago )
European, Asian markets mostly lower in light trading
European and Asian markets are mostly lower in light trading as a partial U.S. government shutdown stemmed holiday cheer
4:09AM ( 4 hours ago )
AP Business
The Latest: Where does public stand on erecting border wall?
Senators from both parties are claiming that the American people are on their side when it comes to spending taxpayer money on a border wall, so who's right?
2:18PM ( 1 day ago )
Group backing private Medicare is funded by insurance giants
A group seen as a champion for Medicare Advantage beneficiaries is funded by insurance giants that stand to benefit as that part of the federal health insurance program grows
4:15PM ( 2 days ago )
Insurance giants bankroll group that pushes private Medicare
A group gaining influence as a champion for Medicare beneficiaries is bankrolled by major health insurance companies trying to cash in on private coverage offered through the federal health insurance program
12:40AM ( 3 days ago )
AP Business - Personal Finance
No Christmas cheer for stock markets after Mnuchin call
Stock markets around the world remained under pressure Monday
8:29AM ( 11 minutes ago )
The Latest: Indonesia tsunami death toll climbs to 373
Indonesia's disaster agency says the death toll from the weekend tsunami has climbed to 373. The agency says that 128 others are missing in the disaster, with 1,459 injured
8:15AM ( 24 minutes ago )
Official: Suicide bomber, gunmen attack government building
An Afghan official says a suicide bomber exploded his car outside the martyrs and disabled persons department building before gunmen entered where they were battling local police
8:13AM ( 27 minutes ago )
Israeli media: Early elections called for April 9
Israeli media are reporting that Prime Minister Benjamin Netanyahu's government has agreed to hold early elections on April 9.
7:51AM ( 48 minutes ago )
Sudan soccer fans clash with police, call on Bashir to leave
Sudanese soccer fans call on Bashir to step down, clash with police
7:38AM ( 1 hour ago )