You can either choose standard deduction or itemized deduction. Our mortgage tax savings calculator helps you calculate the benefits you get from itemizing your taxes. However, understanding the different between standard and itemized education can help you compare your options more efficiently. So, let us start with the standard deduction first.
Standard deductions also decrease the amount you are taxed on. It is, however, fixed dollar amount that depends on the filing status. For instance, it is different for a married couple filing individually and those who are filing jointly. It is also different for a widow or widower and for the head of the household.
The deductions verily increase for those who are past their retirement age i.e. 65 and those who are blind. According to the official report two thirds of the returns claim standard deductions. The major reason why many people choose standard deduction is because it allows them to avoid keeping a record of their expenses in case of IRS audit.
People choose standard deduction because it offers tax benefits even when none of the expense qualifies for itemized deduction. Also, it eliminates the requirement of itemization of the deductions on the first place. Yet, itemization can offer more benefits. These benefits become more clear as you use mortgage tax savings calculator .
With itemized deductions, you can save plenty from your mortgage taxes. True benefits of itemization can be realized in case when your total itemized deduction is more than the standard deduction you will receive. Other cases when a mortgage tax savings calculator can help you find financial Benoit from itemized deductions include the following:
While a mortgage tax savings calculator can help you set your expectations right, there are still a few things to bear in mind about itemization. Firstly, not every dollar is subject to itemization. For instance, in case of medical expenses, only the expense that is more than 7.5 percent of your income is subject to deduction.
For miscellaneous deductions, the income threshold is 2 percent. Similar limits and restrictions apply for other categories. Yet, as long as you are using our mortgage tax savings calculator, you don’t need to worry about them.