Daniel Cullinane CPA
25 Plaza 5 25th fl Jersey City NJ phone 732-516-1648 fax 732-516-9778
2500 Plaza 5 25th fl Jersey City NJ 07311 phone 732-516-1648 fax 732-516-9778
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Even if you have no other qualifying deductions or tax credits, the IRS gives you the standard deduction on a no questions basis. The amount is subtracted from your gross income. Along with your other exemptions, it lowers the amount of income you have to pay taxes on. If you are using the simplest approach to filing taxes, the Form 1040EZ, you have to use the standard deduction; you do not have the option to itemize. If you use the longer Form 1040, you have a choice between taking the uniform standard deduction or itemizing your own customized deductions.
Using the standard deduction means you lose the ability to claim home mortgage interest and other itemized deductions. If you do not itemize you do not have to hang on to records supporting your deductions in case the IRS decides to audit you
The 2015 standard deductions amounts
Married filing jointly $12,600
Married filing separately $6,300
Head of household $9,250
Qualifying Widow $12,600
Taxpayers who are blind or aged 65 or older get a higher amount for the standard deduciton
WHEN TO CLAIM THE STANDARD DEDUCTION
Although using the standard deduction is easier than itemizing, if you have a mortgage or home equity loan it is worth running basic calculations to see if itemizing would save you money. Use the form 1098 provided by your mortage lender and compare you interest deduction to the amount of the standard deduction. And keep in mind that property taxes, state income taxes or sales taxes, charitable donations and losses from thefts or disasters are deductible.