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!