If your real estate taxes aren't paid through an escrow account, review your property tax bills or canceled checks and add up what you paid. If you pay your real estate taxes through an escrow account, look at the real estate taxes shown on Form 1098 or the year-end tax summary your lender provided. Just about everyone pays some form of state and local taxes. All of the rest of your itemized deductions, including state and local taxes, medical expenses, and charitable donations, are just icing on the cake. If the total is larger than your standard deduction, there's a good chance you would benefit from itemizing. Tip: Compare your mortgage interest, points, and mortgage insurance premiums to your standard deduction. It may also include any points, mortgage insurance premiums, and real estate taxes you paid through your mortgage servicer. This form might arrive in the mail, be attached to your December or January mortgage bill, or be available to download online.įorm 1098 shows the amount of mortgage interest you paid during the previous year. In January, your mortgage lender should provide you with Form 1098 (Mortgage Interest Statement). Do you own a home?įor most people who itemize, having a mortgage helps push their itemized deductions higher than the available standard deduction. Here are a few questions to help you decide whether itemizing deductions might be beneficial for you. One spouse 65 or older, both spouses blindīoth spouses 65 or older, one spouse blindīoth spouses 65 or older, both spouses blind If you're 65 or older or blind or both, you may increase your standard deduction by the amount listed below. Those are the numbers for most people, but some get even higher standard deductions. Married taxpayers filing a joint return: $25,100 That might sound like a lot of work, but it can pay off if your total itemized deductions are higher than the standard deduction.įor 2021, the standard deduction numbers to beat are: Then you need to determine whether your available itemized deductions exceed the standard deduction for your filing status. You also need to maintain supporting documentation, such as receipts bank statements medical bills acknowledgment letters from charitable organizations and tax documents reporting the mortgage interest, real estate taxes, and state income taxes you paid during the year. To itemize, you need to keep track of what you spent during the year on deductible expenses like out-of-pocket medical expenses and charitable donations. itemized deductionsĬlaiming the standard deduction is certainly easier. As you prepare to file your next tax return, should you do the same? Standard deduction vs. Nearly 90% of taxpayers claim the standard deduction vs. For information on the third coronavirus relief package, please visit our “ American Rescue Plan: What Does it Mean for You and a Third Stimulus Check ” blog post.
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