Every year you have two options: taking the standard deduction or itemizing your deductions. Let’s look at what each of these options means for you.
What does ‘standard deduction’ mean?
To take an amount determined by the government off your total adjusted gross income (AGI) with no listing or proof necessary, everyone is eligible.
What does ‘itemizing your deductions’ mean?
To go through item by item, and list purchases/donations/ etc. that the IRS will allow you to remove from your total AGI to pay less taxes (it must add up to $1 over what the standard amount is for that year).
Who would want to itemize?
Someone who has receipts or evidence and thinks they have spent/donated enough to get more than the government already gives you as a standard deduction.
Why are there deductions?
As a means to lower your adjusted gross income and taxable income, the IRS allows taxpayers to choose between itemizing deductions or taking the standard deduction. You may choose whichever method you want, but only one is more tax advantageous than the other. In rare circumstances you must choose to itemize.
Who decides the amount of the standard deduction?
The standard deduction is an amount set by the government every year and is dependent on your filing status. There is no other information to enter if you want to take the standard deduction beyond your filing status. You have the option however, to itemize your deductions and Free Tax USA software will help you choose which is best for you.
How does itemizing my deductions work?
Itemized deductions are a combination of many different expenses and/or donations you have made throughout the year and can easily add up to more than the standard deduction. However, in order for itemized deductions to be of use to you on your tax return, the total needs to add up to at least $1 more than your standard deduction.
What can I deduct if I itemize?
The list of what you can itemize for deductions is very long and can be found in part, by looking at Schedule A, Itemized Deductions. General categories of itemized deductions include:
- out of pocket medical and dental expenses (subject to a 7.5% limitation of AGI);
- taxes paid, such as state tax and property or real estate tax;
- interest paid, such as mortgage interest on first and second homes;
- gifts to charity, including cash, checks and donated items like clothes and household furnishings to Goodwill or any 501©3 non-profit;
- casualty and theft losses from floods, fire, vandalism, etc., (under limited circumstances);
- and a catch-all category called other itemized deductions such as gambling losses (up to the amount won).
There are many other types of itemized deductions. You can find an IRS Publications for each of the different categories above to see the full list of what is considered an itemized deduction, such as IRS Publication 502 for Medical and Dental Expenses.
A rare circumstance where you must itemize is if you are married filing separate and your spouse chooses to itemize, you must do so also.
Frequently Asked Questions (FAQs)
You should compare your total eligible itemized expenses (such as mortgage interest, state and local taxes, and charitable gifts) against the government’s set standard deduction amount for your filing status. Choose whichever option gives you the higher dollar amount, as lowering your Adjusted Gross Income (AGI) reduces your overall taxable income. Most tax software programs will automatically calculate both and select the higher deduction for you.
No. You must choose one method per tax year; you cannot combine both. However, certain “above-the-line” adjustments to income (like IRA contributions or student loan interest deductions) can still be claimed even if you choose the standard deduction.
If you are married and filing separate returns, both spouses must use the same deduction method. If your spouse chooses to itemize deductions, you are required to itemize as well, even if your itemized total is lower than the standard deduction amount.
Unlike the standard deduction—which requires no proof—itemizing requires supporting documentation for every expense claimed. You should keep receipts, bank statements, Form 1098 (mortgage interest statements), property tax bills, written donation acknowledgments from non-profits, and out-of-pocket medical bill records.
No. The IRS adjusts standard deduction amounts annually to keep up with inflation. Additionally, taxpayers who are age 65 or older, or legally blind, qualify for an extra bump on top of the base standard deduction amount.
Suresh Saini is the Founder and Lead Financial Researcher at Tax Assistant. He holds a Master of Commerce (M.Com) degree with a specialized focus on Advanced Accountancy, providing him with a robust academic and analytical foundation in complex accounting principles, credit systems, and personal finance structures.
Driven by a passion to democratize financial literacy, Suresh has spent years analyzing and decoding shifting fiscal guidelines. At Tax Assistant, he manages the platform’s core editorial direction, transforming dense government updates and complex banking parameters into structured, clear, and actionable guides for both individual taxpayers and small businesses across North America.
Before launching taxassistant.org, Suresh conducted deep financial and market dynamics research, focusing on asset management, personal wealth optimization, and strategic tax planning. His dedication to data integrity ensures that every piece of news, breakdown, or analysis published under his leadership is rigorously fact-checked by certified tax professionals and aligned perfectly with contemporary regulatory frameworks.
