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2014 Standard Tax Deductions & Credits – Our Top List

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tax deductions and credits 2014

A deduction, or more precisely a standard deduction, is an amount that reduces your taxable income and depends on your filing status (single, married, etc.) Additionally, deductions factor in age (65 years old and older) and blindness of the taxpayer (Forms 1040 and 1040A only; no 1040EZ).

There are also itemized deductions that allow you for more precise estimate of the amount to reduce your taxable income. Often the two approaches yield different results and you can choose to select one that benefits you most. One benefit of the standard deduction is that it’s a set amount applied without a need to fill out itemization form (Schedule A – Form 1040).

What are some common tax deductions?

When getting ready to file taxes many individuals often skip or are unaware of many common tax deductions. Among them are:

  • Charity – although charitable work cannot be used as a deduction a transportation cost can; so next time you go out to help keep a mileage log.
  • Home office – if you’re working from home items such as utilities and rent can be deducted proportionally to their business use.
  • Healthcare – self-employed individuals can deduct the insurance cost and even if your employer provides coverage you can still claim a deduction if your out-of-pocket cost are greater than 7.5% of adjusted gross income.
  • Disaster recovery – you could deduct uninsured replacement cost if no federal help was issued.
  • Financial planning – help from finance professionals can be deducted is the cost is greater than 2% of your adjusted gross income.
  • Moving expenses – deduct costs associated with relocation; certain rules apply such as distance to the new job; for more information be sure to read our full article on moving expenses and taxes.
  • Part-time workers – many people work two part-time jobs and now you can deduct part of costs associated with going from one job to the other.

You cannot claim standard deductions if:

  • You itemize deductions.
  • You are married and your filing status is Married Filing Separately and your spouse itemized deductions.
  • You are a non-resident or of dual-status alien.
  • You are an estate, trust, partnership, or common trust fund.
  • You file taxes for a period shorter than one year due to changes in accounting period.

2014 Standard Deductions

Each year standard deductions are recalculated to adjust for inflation. For most people, the standard deductions are as follows:

  • Single or Married filing separately: $6,200
  • Married filing jointly or Qualifying widow(er) with dependent children: $12,400
  • Head of Household: $9,100

People born before January 2, 1949 or who are blind or are claimed as dependents on someone else’s tax return should refer to deduction charts found in Publication 501 for the exact amounts.

As an example, for a married couple filing jointly a deduction amount can range from $12,400 to $17,200. The upper limit is determined on age and blindness of both taxpayers.

Should you use a standard deduction or itemize?

Most people use standard deductions but there are instances when it pays off to invest some time and itemize. Keep in mind there are limits on an itemized amount based on your gross income and filing status.

Itemized deductions are most effective if you experienced a large expense in the previous year. Common expenses that are itemized are: medical and dental, interest and taxes on your property, unreimbursed business expenses as an employee, uninsured causality or theft, or large contributions to qualified charities.

You may still elect to itemize deductions even if they are lower than standard deductions. That makes sense if a benefit of itemization on your state tax return is greater that the amount of benefits you lose on a federal return.

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