Hello,
I'm wondering if there's a method to calculate whether it's worthwhile to itemize charitable donations or just bypass that and take the standard deduction. I've accumulated quite a few things during the pandemic to donate. But I don't think they'll come out to a large amount of value. Rather than spending the time to go over each item and calculate its fair market value before donation, can I just estimate the value to compare what will be the standard deduction. And if the standard deduction is more, not bother with itemizing?
Thanks,
Enric
When you are estimating your itemized deductions keep the following in mind.
The State and Local Tax deduction does max out at $10,000 regardless of your income. So even if you have $20,000 in state and local taxes, you will only get a $10,000 deduction.
Medical expenses are only deductible for the amount in excess of 7.5% of your AGI. So, if your AGI is $100,000, only your medical expenses over $7,500 will count towards your Itemized Deductions.
Example. If your total insurance premiums and other medical expenses are $5,000 and your adjusted gross income is $50,000, you would get a benefit from $1,250 of the total medical expenses you enter.
$50,000 x.075=$3,750.
$5,000-$3,750=$1,250
You may deduct cash contributions up to 100% of your AGI to Qualifying Charitable Organizations but other types of donations may be limited. This will all depend on the type of items and the type of charities.
The 2021 Standard Deductions to compare to are as follows:
Blind and MFJ or MFS add $1,350
Single or HOH if blind add $1,700
A good way to figure real quickly whether to take the time to itemize or just take the standard deductions is Are my deductions in excess of the standard deduction?
Standard Deductions for 2021 are:
From what I gather deductions are many potential items: charitable donations, medical expenses, property tax, etc. So I think I would need to estimate them all and compare to the Standard Deduction, right? I'm thinking the easiest method is to look at previous taxes and see if they're all by Standard Deduction and go by that.
When you are estimating your itemized deductions keep the following in mind.
The State and Local Tax deduction does max out at $10,000 regardless of your income. So even if you have $20,000 in state and local taxes, you will only get a $10,000 deduction.
Medical expenses are only deductible for the amount in excess of 7.5% of your AGI. So, if your AGI is $100,000, only your medical expenses over $7,500 will count towards your Itemized Deductions.
Example. If your total insurance premiums and other medical expenses are $5,000 and your adjusted gross income is $50,000, you would get a benefit from $1,250 of the total medical expenses you enter.
$50,000 x.075=$3,750.
$5,000-$3,750=$1,250
You may deduct cash contributions up to 100% of your AGI to Qualifying Charitable Organizations but other types of donations may be limited. This will all depend on the type of items and the type of charities.
The 2021 Standard Deductions to compare to are as follows:
Blind and MFJ or MFS add $1,350
Single or HOH if blind add $1,700
Thank you Venessa A for the detailed explanation and breakdown.