Laura Saunders

speaker

5,937 appearances 109 recordings 1 series first heard Jul 2017 last heard Nov 2024

Laura Saunders’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Should You Take the Standard Deduction on Your Tax Return? · 18 Jan 2024 podcast

Taxpayers have a choice.

They can either list all their deductions on Schedule A. That would be for medical expenses and state taxes and also your mortgage interest and things like that.

Or you can take one standard amount and save yourself all that trouble.

For 2023 tax year, which is the taxes that you're doing now, it's $13,850 for single filers and $27,700 for married joint filers.

because the standard deduction could save them more money.

Maybe they don't have a lot of state taxes to deduct, or they don't own a house with a big mortgage, or they've paid off the mortgage.

So in many cases, the standard deduction could be a better deal than itemizing your deductions on Schedule A. It could not only be a better deal, it could be less trouble.

Ever since the 2017 tax overhaul nearly doubled the standard deduction, more and more people have taken it.

It used to be that about one-third of taxpayers itemized deductions.

Now only 10% do.

And so everybody else, that's about 90%, take the standard deduction because it's a better deal for them.

Some states require that you have to do for the state whatever you did for the feds so that if you itemize on the federal return, maybe you have to itemize on the state return and vice versa.

So these decisions should not be made in isolation.

Well, you just look at what your total itemized deductions would be, including medical deductions, and then you see if that's better for you than taking a standard deduction.

But I should warn you, you only can deduct medical expenses to the extent that they exceed 7.5% of adjusted gross income.

And that is really quite a large number for a lot of people.

In fact, often you don't really get to take a medical deduction often.

Unless there are huge expenses like from nursing home costs, those would be deductible or maybe special ed tuition for a child with severe learning disabilities.

You're getting into some really big numbers there.

You can only deduct the amount over 7.5%.

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