Figuring out which tax form to use can be tricky, but it’s really about which one lets you keep more of your hard-earned money. The key aspect here is understanding deductions.
For my spouse and me, we’re trying to decide between the standard deduction, which is $11,600 for jointly filing couples, or itemizing our deductions. The standard deduction seems simple enough, but itemizing could be complicated, and we’re unsure if our total deductions would exceed $11,600. In fact, it might end up being less.
So, what can we include under itemized deductions? Here’s the list:
– Medical expenses
– State income taxes
– Property taxes
– Home mortgage interest
– Charitable contributions
– Casualty and theft losses
– Job expenses
– Miscellaneous deductions
We can’t use property taxes, mortgage interest, or casualty and theft losses, so let’s consider what we can itemize:
Medical expenses: We put $700 into our Flexible Health Spending Account (FSA), which is tax-deductible. Additionally, I contributed $5,000 to our FSA in 2012 for Lasik Eye Surgery, even though it took a chunk of my monthly income.
State income taxes: I’ve paid over $2,200 based on my last paycheck. I don’t have my spouse’s pay stubs, but since he was unemployed for five months, his contribution probably won’t add much.
Charitable contributions: We used to donate regularly to our church, but we stopped when my husband lost his job. We’re hoping to start again this year.
Job expenses: This is complicated due to specific requirements, but my husband’s job searches, including trips to Seattle, Arizona, Nevada, and northern California for tests and interviews, cost about $5,500. However, keeping track of all receipts was a challenge.
Adding up our itemized deductions, we only get around $8,400, which is less than the $11,600 standard deduction. Plus, filing with itemized deductions is more expensive and time-consuming than the standard deduction, so the deductions need to be significantly higher to make it worth the extra cost.
My tax knowledge comes mostly from what I read online. So, how about you? Do you prefer itemizing deductions, or do you stick with the standard deduction?