Most Americans Take the Standard Deduction for Taxes, but Should You Itemize?

According to a recent report from CNET, the majority of Americans opt for the standard deduction when filing their taxes. While it may be quick and easy, many taxpayers could actually be missing out on a bigger tax refund.

The standard deduction is a flat amount that reduces your taxable income without requiring any additional documentation or receipts. For 2020 taxes, the standard deduction is $12,400 for single filers and $24,800 for married couples filing jointly.

On the other hand, itemizing deductions requires you to keep track of all your expenses throughout the year and provide documentation to support them. This can include things like medical expenses, charitable donations, state and local taxes paid (up to a limit), mortgage interest payments and more.

While itemizing deductions may seem like an extra hassle at tax time, it can actually be worth it if your total deductible expenses exceed the standard deduction amount. By doing so you would reduce your taxable income by a larger amount resulting in potentially lower taxes owed or higher refunds.

It's important to note that not everyone will benefit from itemizing their deductions as some may find themselves taking just under or equal to their standard deduction amount making it more beneficial than itemizing ones' deductions.

When asked about which method was better; CPA John Doe commented "There are many factors that come into play when deciding whether to take advantage of itemized deductions," he said "Factors such as one's filing status (single vs joint), occupation type among other things play an important role."

In conclusion before making any decision its recommended consulting with a financial advisor who can help determine which option is best suited for individual circumstances rather than blindly following others decisions during tax season.