- Now that we've worked through the entire Form 1040
for Ramon and Kay and have seen
that they're getting a tax refund of $2,801,
let's add a little complication.
Remember that Ramon and Kay took the standard
deduction of $24,000.
Well what if Ramon and Kay spent more than $24,000
on tax deductible items?
The tax law gives them the opportunity,
if they want to, to itemize their tax deductions.
If they're going to do that, they have
to complete Schedule A.
This adds a little complication to the completion
of their tax form, but not too much.
They just need to carefully list the collected data
for the amounts that they've spent
for the following items.
State and local income and property taxes,
home mortgage interest, and charitable contributions.
Of course there are other deductions
that can be entered in Schedule A,
such as large unreimbursed medical and dental expenses,
and casualty losses in a federally declared disaster,
but these three categories are the most common.
For married filing jointly people
who itemized their deductions in 2016,
the average total of their itemized deductions
was $35,000, so you can see why these people
would want to itemize their deductions,
rather than using the $24,000 standard deduction.
The biggest complication from itemized deductions
is the increased record keeping,
because the burden is on you to demonstrate
that you have actually spent the money
for those items so that you can itemize your deductions.