Written By: MB Group
At the MB Group, one of the most common questions we receive during tax preparation is whether a business owner or individual should choose standard vs itemized deductions on their tax returns. The answer always depends on the business or individual's situation. While both deductions are designed to reduce your taxable income, itemized deductions offer greater potential for more savings. Let's take a deeper look at standard vs itemized deductions and how MB Group can help you decide.
In the most simple sense, the standard deduction is a fixed amount that can be used to lower the amount of income you're required to pay taxes on. Your standard deduction can vary based on your age, income, filing status, and whether you're blind. To make matters more confusing, the standard deduction changes every year. Standardized deductions allow you to:
While the standard deduction may immediately be attractive, not everyone can claim it. You may fall into this category if:
Because of the simplicity involved, an estimated 9 out of 10 taxpayers choose to claim the standard deduction.
Itemized deductions are also designed to reduce your taxable income. You should consider using the itemized deduction if your allowable itemized deductions are greater than the standard deduction or if you have no choice. In either case, the seasoned tax professionals at MB Group are experts in helping small business owners and high-net-worth individuals optimize their returns by using itemized deductions, which may include:
And if you are a small business owner, taking itemized deductions is all but certain. Some of the most common itemized business deductions for sole proprietors, partnerships, and LLCs, include:
Deciding whether to itemize or take the standard deduction can be a relatively complex decision. One simple way is to add up all of the potential expenses you plan on itemizing. If the expenses are more than the standard deduction, itemization may be the way for you.
However, itemizing your expenses is a very time consuming and tedious process. It requires you to keep solid records throughout the year. In addition, you should keep the receipts after you file in the event of an audit. Because of the extra work, many people and business owners leave substantial "money on the table" and choose to go the standard route.
Whether you're a high-net-worth individual or a small business owner, you shouldn't ever "leave money on the table." Yet, you may not have the time or expertise required to effectively itemize your tax return. And this is where the experts at MB Group can help.
We specialize in helping high-net-worth individuals and business owners maximize their tax return through our strategic process of planning. We'll work closely with you to ensure we have everything we need to make tax planning and tax filing a less taxing affair. Contact the MB Group today.
Tags: Taxes Tax Preparation
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