You Might Not Need to Itemize Deductions This Year: Here’s Why

tax tips | December 21, 2018 | By Susannah McQuitty

Illustration of a taxpayer filing online

Saving the most money on your taxes with either the standard deduction or itemized deductions looks different for each individual: Typically, young professionals and college students lean more toward claiming the standard deduction, while homeowners have enough individual deductions to merit the extra work of itemizing deductions.

But as of this year, even homeowners and other taxpayers with complicated deductions may be able to save on their taxes without having to itemize, all thanks to tax reform’s new standard deduction rates.

The standard deduction is almost double this year

The standard deduction is a fixed, base-level amount based on your filing status (like married filing jointly, single, or head of household) and tax situation. You don’t have to list out any individual deductions to claim the standard, which saves time and effort when you file.

For your 2018 taxes, the standard deduction is $12,000 for single or married filing separate, $24,000 for married filers, and $18,000 for head of household filers. Those rates are almost double what they were last year, and if you're over 65, blind, or disabled, you get an additional $1,300 ($1,600 for unmarried taxpayers).

Since the amounts grew substantially, many taxpayers will be able to save as much with the standard deduction this year as they did in previous years by itemizing deductions. Tax breaks with less work? Yes, please!

Computer with “Should I take the standard deduction?” on screen

Does the personal exemption still stack with the standard deduction?

No; the personal exemption, which reduced taxable income by $4,050 and could be taken for yourself, your spouse, and your qualifying dependents, has been repealed in favor of raising the standard deduction. The standard deduction also reduces your taxable income, but only applies to each filer, not each person.

At first glance, this looks bad for big families who were able to claim $4,050 for each member of the household, but there’s good news: the Child Tax Credit (CTC) was also raised by tax reform from $1,000 per child to $2,000, and $1,400 of that is refundable (meaning that, even if you have a zero-dollar tax liability, you could get up to $1,400 in the form of a refund). You can read more about tax reform for families in this blog post.

Do you have to take the standard deduction? What if you’d rather itemize?

Taxpayers can still itemize deductions, but many won’t have enough individual deductions to merit itemizing. There are fewer deductions available to claim this year, too: Unreimbursed employee expenses, tax preparation fees, other miscellaneous deductions and safety deposit boxes can no longer be deducted on Schedule A.

You can, however, still deduct state and local income taxes (capped at $10,000), mortgage interest, home equity loan interest (with new caveats), medical expenses, disaster losses (attributable to a federally declared disaster), charitable contributions (up to 60% of income), and other deductions not subject to the 2% floor.

The bottom line: Some taxpayers will still benefit from itemizing deductions, but many others will be able to save some time, take the standard deduction, and save a comparable amount on their taxes.

Help me choose between the standard deduction and itemized deductions!

Gathering all the necessary paperwork to file your tax return can be daunting, especially if you have a lot of individual tax deductions to add up.

When you file with 1040.com, we’ll simply ask you a few questions to figure out which deductions you should claim based on your filing status and financial situation. You’ll get as many tax breaks as possible, whether from standard deductions, itemized deductions, or above-the-line deductions, as easily as possible.

Be sure to check out our Tax Estimator App for a sneak peek of which deduction type will be most beneficial to you, and remember to file your tax return with 1040.com once you have all your records together!

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