This is a tricky question as there are so many things deductible on your taxes but they are subject to different rules. Plus, rules are different if you are self employed or not, etc.
Basically speaking, deductions have a purpose - lowering your taxable income.
The federal standard deduction is a fixed dollar amount, based on your filing status and age, that the IRS lets you take off (deduct) from your taxable income.
On the other hand, the itemized deduction allows you to list (itemize) your deductions on Schedule A. Roughly a third of all taxpayers itemize. Schedule A lets you report certain deductible expenses like:
- Medical and dental costs above and beyond 10% of your AGI
- State, local, real estate, and personal property taxes
- Home mortgage interest
- Charitable donations and gifts
- Casualty or theft losses
- Unreimbursed employee expenses above and beyond 2% of your AGI
The IRS lets you choose whichever will help you more. Either you have enough to claim deductions individually on the Schedule A, or you didn't so you're given a set amount as a freebie.
What is left will fall somewhere in the tax bracket which specifies how much you were responsible to pay in to the government. If you paid in more than they required, you get a refund. If you paid less, you may find that you owe.
But, to complicate things even more, there are also credits that can help you out to avoid owing the IRS. It's best to walk through the TurboTax program and let it figure everything out for you.
