Hamlet of course had his famous question "to be or not to be." The line is so indelible now it's hard to imagine that it was once unwritten.
Though the choice perhaps lacks the existential drama of Hamlet's, taxpayers too are faced with a choice that can be expressed as a dichotomy: to itemize or not to itemize.
In this post, then, we will consider the choice that taxpayers face regarding whether to itemize deductions or to take the standard deduction.
Is it worth it to put in the time and effort needed to keep track of expenses which are eligible for deduction?
The place to start is to be aware of how much the standard deduction is. For 2013 returns, the amount is $6,100 for those filing singly and twice that for those filing jointly. Taxpayers who are over 65 can also take additional amounts in "adjustments to income," which is the technical IRS term for tax deductions.
For taxpayers with significant expenses that fall into deductible categories, however, itemizing may be an opportunity to save some money on taxes. These categories include such things as home-mortgage interest, charitable donations and various business-related expenses.
To be sure, as we have noted before, taking what the IRS considers to be unusual tax deductions can raise the risk of tax audits. But as we pointed out in our March 24 post, that does not mean a taxpayer should shy away from claiming legitimate deductions.
In short, the question of whether or not to itemize may lack the pathos of Hamlet's "to be or not to be." But it remains an important and fundamental question for individual taxpayers who devoutly seek to minimize their tax liability.
Source: NASDAQ.com, "Smart Tax Deductions Non-Itemizers Can Claim," Kiplinger, April 3, 2014