Taxpayers have the option to claim either the standard deduction or itemized deductions when filing their individual federal income tax returns. These below-the-line deductions serve to reduce the taxpayer’s taxable income, potentially lowering the amount of income subject to taxation.
Uncertain about whether to choose the standard deduction or itemized deductions for your tax filing? Explore this article for guidance and clarity.
The choice between the two will depend on which method results in a lower tax liability.

1. What is the difference between itemized deductions and standard deductions?

The standard deduction is a fixed amount that reduces your taxable income. It varies based on your filing status, age, and whether you’re blind or disabled.The standard deduction rates for the tax year 2023 are as follows:

  • For single taxpayers and married individuals filing separately, the standard deduction is $13,850.
  • For married couples filing jointly, the standard deduction is $27,700.
  • For heads of households, the standard deduction is $20,800. 1

Please note that the standard deduction can be further increased for taxpayers who are aged 65 or older, or are blind.

In contrast, itemized deductions are specific expenses recognized by the IRS that can also reduce your taxable income. These include medical expenses, state and local taxes, mortgage interest, and charitable contributions.2

2. What determines if I should take itemized deductions or standard deductions?

Whether you should take the standard deduction or itemize your deductions depends on the total amount of your itemized deductions. If the total amount of your itemized deductions is greater than your standard deduction, it would be beneficial to itemize. Another reason to take itemized deductions is if you are not eligible to claim the standard deduction – for example, you are a non resident alien and your country’s tax treaty with the US does not specifically state that you are eligible to take standard deduction (Shout out to Indian Residents students- US Non resident – aliens 3, who get standard deductions just like US residents). In that case, since you cannot take standard deduction, you should take itemized deductions if you have any. 2

3. What are some common itemized deductions that taxpayers can claim on their tax returns?

Common itemized deductions include medical and dental expenses, state and local taxes (including property, income, and sales taxes), home mortgage interest, investment interest, charitable contributions, casualty and theft losses, and certain miscellaneous deductions.4

4. Where do I report all the itemized deductions on my tax return?

Itemized deductions are reported on Schedule A of Form 1040. Each type of deduction has its own section on the form, and the total itemized deductions are then transferred to Form 1040, Line 12.4

5. Are there any limitations or restrictions on itemized deductions?

  • medical expenses must exceed 7.5% of your adjusted gross income (AGI) to be deductible. 
  • State and local tax deductions ,plus property and real estate taxes are capped at $10,000 ($5,000 if married filing separately). You can elect to deduct state and local general sales taxes instead of state and local income taxes. You can’t deduct both.
  • For eligible debt incurred after December 15, 2017, you’re limited to deducting home mortgage interest on a maximum of $750,000 (or $375,000 if you’re married and filing separately) of that particular debt.
  • Gifts to Charity for an amount more than $250 has some conditions attached to it. 4

6. How is Standard deduction and Itemized deduction different in case of Non Resident Aliens?

Nonresident aliens are generally not allowed to claim the standard deduction and must itemize their deductions. However, there are exceptions for students and business apprentices from India, who may be eligible to claim the standard deduction. 3

7. Can taxpayers switch between itemized deductions and the standard deduction from year to year?

Yes, taxpayers can switch between itemized deductions and the standard deduction from year to year. This flexibility allows taxpayers to choose the method that provides the greatest tax benefit each year.

8. How can taxpayers determine if they would benefit more from itemizing deductions or taking the standard deduction?

Taxpayers can determine which method is more beneficial by calculating their taxes both ways. This involves completing Schedule A of Form 1040 to determine the total amount of itemized deductions and comparing it to the fixed standard deduction for that year.

9. Can USA Tax Gurus help me decide which would be better for me; itemized deductions or standard deductions?

Yes, as tax professionals we can provide guidance based on your specific circumstances. We can help you understand the potential tax benefits of both options and assist you in making an informed decision. Please click here to connect with us today!


Source 1: Tax inflation adjustments for tax year 2023
Source 2: IRS Topic No. 501, Should I Itemize? 
Source 3: Publication 519 (2022), U.S. Tax Guide for Aliens
Source 4: IRS Schedule A (Form 1040) Instructions