Standard Deduction Tracking

[marko]

I keep pretty detailed Excel records of my deductions but I'm wondering:
Each year that I go through TT I have to enter all those deductions in great detail only to often find that the standard deduction is a better avenue.

Could I simply add up all my medical, property tax, charitable etc etc etc and get a sum that would tell me if I should bother even entering them into TT? Or is there some nuanced percentages that take place in the IRS/TT calculations that make that not possible. Just trying to speed up the process for next year.

 

[rk911]

I keep pretty detailed Excel records of my deductions but I'm wondering:
Each year that I go through TT I have to enter all those deductions in great detail only to often find that the standard deduction is a better avenue.

Could I simply add up all my medical, property tax, charitable etc etc etc and get a sum that would tell me if I should bother even entering them into TT? Or is there some nuanced percentages that take place in the IRS/TT calculations that make that not possible. Just trying to speed up the process for next year.

You could but it might not be accurate. Qualified medical expenses are limited to the amount in excess of 7.5% of your AGI. Pretty sure taxes are limited to a max of 10K. And charitable contributions have rules that can be confusing.

IRS Charitable Deductions

 

[Jerry1]

You could but it might not be accurate. Qualified medical expenses are limited to the amount in excess of 7.5% of your AGI. Pretty sure taxes are limited to a max of 10K. And charitable contributions have rules that can be confusing.

IRS Charitable Deductions

True, there are complications, but in those examples, the problem only goes in one direction. In other words, if you’re over the standard deduction in total, you might still be better off taking the standard deduction due to limitations. However, if you add up all deductions and you’re under the standard deduction, there’s no point in entering them into the tax software. Of course, there might be some credits that could be available to you but if you know your tax situation well, that seems to be a low risk.

Personally, with no mortgage interest, low property taxes and no state income tax since retiring, I’m far enough away from the standard deduction that I don’t even bother adding them up to get a total, let alone enter them into TT.

 

[SecondCor521]

I keep pretty detailed Excel records of my deductions but I'm wondering:
Each year that I go through TT I have to enter all those deductions in great detail only to often find that the standard deduction is a better avenue.

Could I simply add up all my medical, property tax, charitable etc etc etc and get a sum that would tell me if I should bother even entering them into TT? Or is there some nuanced percentages that take place in the IRS/TT calculations that make that not possible. Just trying to speed up the process for next year.

Sure. That's exactly what I do and why as a AARP Foundation Tax Aide volunteer. If a client wants me to enter it all in, I will. But when I explained that it will just take more time and work for zero benefit, every client I had this season agreed to not bother.

Note that unless Congress acts (and I think they will, but how they will is a complete mystery to me), the tax laws revert on 1/1/2026. It may be beneficial for you to start tracking and entering itemized deductions again at that point.

 

[OldShooter]

We used to itemize deductions but having moved all the charitables to QCDs there is no need to keep track or to itemize. Sans charitables, our deductions are only about half the standard deduction amount so we don't worry about it any more. Taking the standard deduction gives us a big bonus deduction vs the old way.

 

[marko]

True, there are complications, but in those examples, the problem only goes in one direction. In other words, if you’re over the standard deduction in total, you might still be better off taking the standard deduction due to limitations. However, if you add up all deductions and you’re under the standard deduction, there’s no point in entering them into the tax software. Of course, there might be some credits that could be available to you but if you know your tax situation well, that seems to be a low risk.

Personally, with no mortgage interest, low property taxes and no state income tax since retiring, I’m far enough away from the standard deduction that I don’t even bother adding them up to get a total, let alone enter them into TT.

Thanks. I wanted to also quote rk911 but need to figure out how to "multiqoute" again

 

[audreyh1]

We don’t track small itemized deductions as Quicken tracks everything already and it’s easy to go back and get the details in a report.

And we don’t enter any itemized stuff into TurboTax unless there was an event during the year that we are sure gets us past the standard deduction. Our charitable donations generally come from a DAF so those don’t count. What would count is a large donation to the DAF and/or a large donation directly outside the DAF. Then other items add up such as up to $10K state/sales tax/property tax. Our medical hasn’t yet exceeded 7.5% of AGI yet so we haven’t ever had that itemized. No mortgage interest either.

Our strategy is more a proactive tax planning approach. If it looks like we are doing a large direct charitable donation then we figure out opportunities to pile on more things like a contribution to the DAF etc. knowing we’d have at least close to $10K for state related deductions. And using the what-if form in the previous year TurboTax to get an idea of the tax impact.

In general before the standard deduction doubling it was straightforward to itemize every other year as we would double up property tax payments into one year and make donations to the DAF of appreciated securities that same year.

In the future we’ll be making big donations via QCDs and less (just the smaller ones) from the DAF so itemizing may go away as an option. No need to add more to the DAF either.

 

[jebmke]

We use one of our DAFs to pass-through the small charitable items so no need to keep track of details.

I'd have to be in pretty bad shape to exceed the 7.5% on medical so I don't bother keeping track

 

[RetiredHappy]

I keep a spreadsheet before starting on TT each year. My speadsheet has all Medical spendings, income sources etc, and calculation of 7.5% of income, property taxes etc. It tells me precisely whether to take itemized or standard deductions. Since our medical expenses are about $35K to $40K between the two of us, and going up until I reach 65, we itemize each year. Once I reach 65 and Medicare kicks in, I think we will be on standard deductions.

 

[Texas Proud]

One thing you can do if available is to double up your property taxes and other deductions every other year...

So, year 1 you do not pay your property taxes or make charitable donations... year 2 you pay your year 1 taxes in Jan and year 2 taxes in Dec... and make double your donations...

This might lead to taking standard deductions in year 1 and itemized in year 2... rinse and repeat...

 

[CardsFan]

Since I know that I will take the standard deduction, I don't bother inputting all the donations. BUT, in MO, health insurance costs are are handled differently on the state level, so I am sure to put those in.

 

[Jerry1]

Thanks. I wanted to also quote rk911 but need to figure out how to "multiqoute" again

You press the +Quote button (next to “reply) for as many as you want and then go to the reply box at the end of the thread. There will be a button to add the quotes (“ insert quotes . . .)

 

[Out_the_Door]

I enter all the deductions in TT even though I know that TT will default to the standard deduction because it is greater. Where it helps for me, is in State Taxes. As my itemized deductions are always greater than the state's standard deduction. All that info is just migrated over to the State forms.

 

[Flieger]

One thing you can do if available is to double up your property taxes and other deductions every other year...

So, year 1 you do not pay your property taxes or make charitable donations... year 2 you pay your year 1 taxes in Jan and year 2 taxes in Dec... and make double your donations...

This might lead to taking standard deductions in year 1 and itemized in year 2... rinse and repeat...

I think I will look at this if the laws don't change substantially. Thanks for posting!

 

[SirJon]

I keep pretty detailed Excel records of my deductions but I'm wondering:
Each year that I go through TT I have to enter all those deductions in great detail only to often find that the standard deduction is a better avenue.

Could I simply add up all my medical, property tax, charitable etc etc etc and get a sum that would tell me if I should bother even entering them into TT? Or is there some nuanced percentages that take place in the IRS/TT calculations that make that not possible. Just trying to speed up the process for next year.

Lumping everything together is fine for federal taxes, but depending on your state, it might cause you to miss out on state-only deductions. For example, in Missouri where I live, long-term healthcare premiums are deductable.

Two other warnings: don't lump medical cost with anything else because of the 7.5% AGI exclusion on medical. Lumping everything else is OK to see if itemizing is an advantage, but be sure to remember to change it back to a detailed report before filling.

 

[2retireearly]

As another poster beat me to it..I always put the deductions in TT, and toggle back and forth, to see what I may owe with taking standard vs itemized, as it is always better for my state taxes, if I use the itemized, as my State's Standard (Virginia) is a lot lower than the federal's standard, and my state says, if I use Standard for federal, then my State's tax defaults also to Standard. Usually I try to use Itemized, so then the State uses Itemized. I see if the net amount owed with both fed and state is better if I use standard or itemized.

 

[marko]

So this is interesting. Last year (2023 taxes) our Standard Deduction was $33004. With no changes to status or ages, TT says our SD for 2024 is $32300. How can that be? Doesn't seem right that it should be less.

 

[braumeister]

So this is interesting. Last year (2023 taxes) our Standard Deduction was $33004. With no changes to status or ages, TT says our SD for 2024 is $32300. How can that be? Doesn't seem right that it should be less.

Sounds like you had a QBI added on?

 

[marko]

Sounds like you had a QBI added on?

Found it! TT took last years regular SD, and added DWs HSA deduction and added them together in their "report" comparing last year with this year. Glitch.

 

[TrvlBug]

We unfortunately have to track all the deductions. Even though we take the standard deduction for federal, our state allows us to itemize and it's worth the extra work.

 

[audreyh1]

We unfortunately have to track all the deductions. Even though we take the standard deduction for federal, our state allows us to itemize and it's worth the extra work.

Sounds like it’s worth it. We would in your case. Fortunately Quicken lets you mark any transaction as tax related and it’s easy to generate an annual tax report.

 

[Montecfo]

I plan each year for whether we will itemize or not by bunching deductions. So I know already whether to enter them or not.

Now only caveat would be if those deductions have relevance for state taxation.

 

[2retireearly]

We unfortunately have to track all the deductions. Even though we take the standard deduction for federal, our state allows us to itemize and it's worth the extra work.

You're lucky your state lets you do this. Mine, VA, doesn't. So I keep track of my deductions, and if they are within a few thousand of the standard, I run the Fed and State with both standard and itemized, to see the net results, to decide if I should chose standard vs itemized..

 

[jollystomper]

Since we track our expenses via Quicken, it is easy to get "raw totals" for each of the potential deductible areas to see if it worth itemizing or not. I can add that up (the only calculation necessary is the pct of medical expenses and max state taxes at $10K) to get a rough idea. I can, as a first pass, just put those raw total is the tax software without much effort to experiment. It was worthwhile since my state taxes would vary based on whether or not we itemized on our Federal deductions.

There were years when itemizing meant a net higher refund (or lower owing) across the sum of federal and state income tax than if we took the standard deduction. However, a few years ago the state provided an income deduction for pension and retirement account distribution income for those 65 and over. This greatly reduced our state taxes when I turned 65; since them taking the federal standard deduction has always been better. But is still nice to do "what if" to be sure .

 

[pb4uski]

I keep pretty detailed Excel records of my deductions but I'm wondering:
Each year that I go through TT I have to enter all those deductions in great detail only to often find that the standard deduction is a better avenue.

Could I simply add up all my medical, property tax, charitable etc etc etc and get a sum that would tell me if I should bother even entering them into TT? Or is there some nuanced percentages that take place in the IRS/TT calculations that make that not possible. Just trying to speed up the process for next year.

I never enter itemized info. I know that well never be close to itemizing so I don't bother. Ditto with the other 4 returns that I prepare.