Now we come to the part where you must decide if you should take the standard deduction or itemize your deductions. Are you looking at the previous statement like a deer in headlights because you’re not quite sure what a deduction is?

It’s ok. I got you.

Basically, a deduction is an expense you paid that can be subtracted from your income. This is a good thing. Less income means less taxes you will have to pay. It is best to take the road that will give you the highest deduction. You can locate your standard deduction in the bubble next to line 12.

If you have enough to itemize, then you must use Schedule A. Some examples of deductions to itemize are medical and dental expenses, state and local taxes, and home mortgage interest. Enter your standard or itemized deduction amount on line 12a. IRS has gotten nice in its old age.

It now will let those who take the standard deduction to also get an additional deduction on donations to charitable organizations. Enter the amount you donated up to $300 ($600 if filing jointly) on line 12b. Enter the total amount of 12a and 12b on line 12c. If you have a business or business type income, then you can also claim the Qualified Business Income Deduction.

To compute your deduction, use Form 8995. Use Form 8995-A if pre-tax income is above $164,900 ($329,800 if filing jointly) or if you’re a patron of an agricultural or horticultural cooperative. Add lines 12c and 13 together and enter on line 14. Subtract line 14 from 11 enter on line 15.

This is your “taxable income” or the portion of income you actually have to pay taxes on. Hopefully you have severely lessened your income amount. Great job! So, take a breath, pat yourself on the back. Have a cup of tea. Then, we’ll look at a tax taxable.

Schedule your next tax appointment with Angie Love’s Taxes.