Make first tax return move

Are you gearing up to prepare your 2024 income tax return?

You should decide a key issue up-front.

Strategy: Compare the standard deduction to your estimated itemized deductions. You’re entitled to claim one or the other—but not both. Typically, you should opt for the biggest tax bang for your bucks.

Here’s the whole story: The standard deduction is a flat amount that is adjusted annually for inflation. In contrast, itemized deductions can vary year to year based on the amount of your deductible expenses. The Tax Cuts and Jobs Act (TCJA) dramatically changed the landscape. Under the TCJA, certain deductions are suspended or modified for 2018–2025, such as deductions for miscellaneous expenses, limitations on deductions for state and local tax (SALT) payments and limitations on deductions for personal casualty and theft losses. Also, the standard deduction amounts are dramatically increased and adjusted annually for inflation. For 2024 returns, the standard deduction is $14,600 for single filers and $29,200 for married joint filing. Icing on the cake: If you’re age 65 or older, you can take an additional standard deduction. This extra amount, which is also indexed for inflation, is $1,950 for a single filer and $1,550 for each qualified spouse filing a joint return for 2024.

As a result, about nine out of every 10 tax return filers are currently claiming the standard deduction instead of itemizing deductions.

But that doesn’t mean the decision is a slam-dunk. If you paid out significant deductible expenses in 2024 you may able to itemize for 2024.

Here are five common deductions. 1. Charitable deductions. Generally, you can deduct cash donations to charity, up to 60% of your adjusted gross income (AGI). For gifts of property, the limit is 30% of AGI. Any excess can be carried over to the next tax year. 2. Medical expenses. The deductible amount on your 2024 return is the excess of qualified unreimbursed expenses to the extent they exceed 7.5% of your AGI. If you don’t clear this threshold, no deduction is allowed. 3. SALT payments. The maximum amount you can deduct in 2024 is capped at $10,000, or $5,000 if you use married-filing-separate status. 4. Mortgage interest. The TCJA limits deductions for mortgage interest to the amount paid on the first $750,000 of home acquisition debt. Currently, no deduction is allowed for interest paid on home equity debt unless the proceeds are used to acquire or improve homes. 5. Personal casualty losses. If you suffered an uninsured loss in a federally declared disaster, you can deduct the loss to the extent it exceeds 10% of AGI (after subtracting $100 per casualty event). Finally, keep in mind that other expenses can potentially be deducted “above the line,” subject to certain limits and special rules. This means that you can claim the write-offs whether you itemize or not. These expenses also reduce your AGI for other tax purposes.

The list includes: ? IRA and self-employed retirement plan contributions ? Self-employed health insurance premiums ? 50% of self-employment tax ? Student loan interest subject to an annual limit ? Health savings account (HSA) contributions ? Eligible alimony payments ? Penalties on early CD or savings bond withdrawals ? Classroom expenses for educators subject to an annual limit. Caveat: Don’t assume that either the standard deduction option or the itemized deductions option is better. Do the math. Tip: Tax-prep software will do all