Tag: itemized deduction

Posts Tagged ‘itemized deduction’

Itemized Deductions vs. the Standard Deduction

Posted by admin on November 29, 2016
Last modified: January 5, 2017

What is the difference between claiming the standard deduction and itemizing deductions?

In general terms, a deduction is a certain amount you are allowed to exclude from your income. This means that you are taxed on a lower amount of income, and thus pay less in taxes. While not as valuable as tax credits – which directly decrease your tax liability – deductions can still reduce your tax burden significantly.

There are two ways to claim deductions.

  1. Itemize deductions. Add up all of your allowable expenses and subtract them from your income.
  2. Claim the standard deduction. Deduct the basic amount available to everyone.

While preparing your taxes you need to figure out whether you get a bigger tax break from itemizing your deductions or claiming the standard deduction. Most people end up claiming the standard deduction, but some people have enough allowable expenses to make it worth their while to itemize deductions.

The Standard Deduction

The standard deduction is a fixed dollar amount that reduces the amount of income on which you are taxed. The amount of the standard deduction depends on your filing status and whether you can be claimed as a dependent on another return. For the 2013 tax year, for example, the standard deduction is
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Can I Deduct Overlooked Expenses from Previous Years on This Year’s Taxes?

Posted by Michelle O'Brien on October 26, 2016
Last modified: December 21, 2016

Lumping overlooked tax deductions in with this year’s return is hardly an option.

Generally speaking, you cannot deduct expenses from a previous year on this year’s tax return. You can only deduct expenses in the year that you paid for them.

Each tax return reports finances for its own year and each of those years needs to be kept separate. Deductions, income or anything else from a previous year cannot be claimed with the current year’s tax information.

*Note: One of the exceptions to this rule is the tuition and fees deduction. This tax break allows you to claim qualified education expenses from the previous year as long as they were for school sessions that began in January-March of the tax year you are currently filing for.

File an amended return if you can

If you’re completely gung ho on finding a Plan B, we may have a solution for you. You can file an amended tax return if you discover a tax deduction you missed in a previous year. What’s the catch? It needs to be a completely legitimate expense. On top of that, it needs to be within the three-year time frame from the deadline date the original tax return was due.

To file an amended return, here’s what you should do: (more…)