February 27, 2014

Itemizing your tax deductions only benefits you beyond the standard deduction limit. Why is this important to understand? Example?

2 thoughts on “February 27, 2014”

  1. Garrett Haag says:

    Because you may be able to get tax deductions and benefits that you normally would not be able to get through the itemized deductions, but if you have to pay someone to do your taxes to find the itemized deductions when you could do your own taxes for free with the short form, either way you could do your own taxes for free but some people are not comfortable doing their taxes beyond the most simple ones.

  2. Mike Finley says:

    This was a tough question. Garrett gave it a good shot. Here is more on the subject.

    The federal standard deduction for single people in 2014 is $6,200 and $12,400 for married folks who file jointly. The itemized deductions (mortgage interest and property taxes are two of the biggest) do not benefit you until you go beyond those numbers. For example:

    You have itemized deductions of $14,000 as a married couple filing jointly. The only real benefit you are receiving is $1,600, which is the amount over the standard deduction. If you have a collective state and federal tax rate of 30%, then your benefit would be $480. That is nice, but it is not the big deduction that many people in the real estate industry would have you believe.

    DO NOT buy something (a home for example) for the tax deduction. The tax code is designed to benefit the wealthy, the high income, the powerful, and the well connected. Not YOU. Make sure you understand that the next time someone is trying to “sell” you on the big tax write off based on buying this or that. Buyers beware!

Leave a Reply

Your email address will not be published. Required fields are marked *

The Crazy Man in the Pink Wig