I used to receive under $500 refund, but this year I ended up paying about $60 dollars. I prefer having my financial life as simple as possible, but I want to know whether there is a certain income level for a single filer to itemize deduction as a rule of thumb.
2007-03-08 15:33:33 · 6 answers · asked by hananimsarang 3 in Business & Finance ➔ Taxes ➔ United States
You can itemize any year you like; there are no qualifiers or thresholds that the government requires you to meet. However, you should itemize if your total itemized deductions are more than the standard deduction amount. Having a mortgage is a big reason to itemize even if a person has very few other deductions since interest on mortgages are high compared to the principle paid.
Unfortunately, simply reading the deduction line items on the page two of a 1040 doesn't tell you in clear terms what's exactly is deductible and if any exceptions apply. The 1040 instructions of course explain all this, but find a layman's book like Taxes for Dummies to help you understand the deductions.
2007-03-08 15:49:51 · answer #1 · answered by Opal 6 · 0⤊ 0⤋
No, there is no certain income level at which you should itemize. It depends on your deductions. If you are head-over-heels in debt, pay your own medical expenses and are a very large contributor to charities, then it's time to start "thinking" about it. Run the numbers to see which is better for your particular needs. The standard deduction is set at a fairly high level, so it takes alot of "extra-curricular" financial dealings to justify itemizing deductions.
If you want to increase your chances of receiving a refund for next year, consider opening an IRA account. You can claim it on the short form with no need to itemize. By the way, you still have until April 15th to open an account that will apply to last year's taxes if you specifically request it that way.
2007-03-08 23:58:56 · answer #2 · answered by duzzitmatter 2 · 0⤊ 0⤋
When your itemized deductions exceed the standard deduction, you want to itemize. There are other items than mortgage interest you can itemize. Charitable donations and medical expenses are two of the most common. If you do your own taxes, get a good software like Turbo Tax next year. It will ask you questions on your income and deductions, then let you know if it is better to itemize or use the standard deduction.
2007-03-08 23:38:46 · answer #3 · answered by Brian G 6 · 0⤊ 0⤋
Short answer is no, itemizing your deductions is strictly related to what items you have to itemize not your level of income.
If you were to have a lot of charitable contributions then you might itemize (keeping in mind the new rules for 2007) or home mortgage interest, high sales tax deduction (ie: new car purchase): note this takes the place of your itemized deduction fo state income taxes. An extraordinary amount of medical expenses might be a good time itemize.
There is a wide range of when it would be beneficial to itemize, but most people don't itemize unless they have those big home mortgage interest payments to push them up over their standard deduction.
Sorry I was rambling, but a very open ended question. I hope you claimed your $30 telephone excise tax credit.
2007-03-09 00:16:23 · answer #4 · answered by Sumbo 1 · 0⤊ 1⤋
People usually don't itemize unless they own a home (and pay a gross ton in interest) or they have excessive medical bills for the year.
The other deductions usually aren't enough to bother with.
I guess if you suffered a large casualty loss (fire, theft, flood, earthquake, etc.) that wasn't covered by insurance, you might try that, too.
Otherwise, it's not worth your time to even look at itemizing.
2007-03-09 04:56:06 · answer #5 · answered by Anonymous · 0⤊ 0⤋
When your itemized deductions exceed your Standard Deduction, then itemize. Thats all there is to it.
2007-03-09 01:07:40 · answer #6 · answered by jeff410 7 · 0⤊ 0⤋