I have a question about claiming itemized deductions. Do I add state and local taxes together when claiming itemized deductions?
Regarding claiming itemized deductions on your tax return, yes, you combine state and local taxes. You can claim either state and local income taxes, or state and local sales taxes. You can't claim both. Itemized deductions include expenses that are not otherwise deductible, including mortgage interest you paid on up to two homes, state and local income or sales taxes, property taxes, medical and dental expenses that exceed 7.5 percent of your adjusted gross income and any charitable donations you may make. Itemized deductions can also include a myriad of other assorted deductions (such as work-related travel, union dues, equipment necessary to do your job, tuition for classes required for you to fulfill your current role, etc.) Once you decide to itemize, you are eligible to claim any and all of them. The benefit of itemizing is that it can allow you to claim a larger deduction than the standard deduction for your filing status. The standard deduction is easier to claim, but for many taxpayers, itemizing has the potential to result in a lower tax burden. The key is to determine if itemizing would be profitable for your particular circumstances. If you are considering itemizing as opposed to claiming standard deduction, it is important to maintain records of all your expenses.
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So how much will you get (or owe) this year? That’s the million-dollar question. We happen to have three very useful calculators to help you estimate your refund or balance due.