Should You Itemize Your Deductions?

Each year, people who file tax returns must decide whether or not they should take the standard deduction or itemize their deductions. For some people, the decision is an easy one. But for others, who have many potential deductions like a mortgage or high state income tax, it can be tricky to figure out which type of deduction you should take.

The easiest way to know is by compiling a list of all the things you can deduct on your returns. It's important to look this up as many people are unaware of the deductions they are allowed to take. You may very well quality for a lot more deductions than you originally thought. Once you have a list of all your deductions, then gather your records and add up the deductions. If the amount exceeds $6300 (which is the standard deduction as of this writing), then you are better off itemizing your deductions. Note, however, that itemizing deductions takes more work. Therefore, if your total itemized deductions is just slightly over $6300, you may want to just use the standard deduction. This is especially true if you use a tax service and will be charged a higher rate for preparing a more complicated return.

With that being said, I do believe it's in your best interest to do your tax preparation on your own using software like Turbotax. This puts you in the driver's seat, and the program will automatically calculate what type of deduction you should take. I'll be the first to admit that it may feel rather daunting to have to prepare your own taxes. But what you need to know is that if you use a software program such as Turbotax, the program will guide you every step of the process. In some cases, you may need to do a bit of research on your own, but this is easily done on the internet. Aside from that, you just answer questions that the Turbotax program poses to you, and your returns will be filled out accordingly. The best way to see how the program works is by using the free edition of Turbotax, and you can get it from FreeTrialSpot.com. The software can be used 100% online, and you can therefore get started right away. You will need to create an account, but after that, you can use the program for free to prepare your returns. If you are happy with the return the program generates, you can then file it electronically if you buy the program. Note, however, that in some cases, you will be able to e-file for free as well. This option is only available to those who have really straightforward tax returns. Most people, unfortunately, will need to buy the program in order to submit their returns. But the good news is that you'll still end up saving money compared to what you might pay using a standard tax preparation service like Liberty or H&R.