Should You Itemize Deductions On Your 2015 Tax Return?

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When you fill out your 2015 tax return, you have two options when it comes to calculating your deductions. You could take a flat-rate standard deduction, or you can choose to itemize, which means adding up and claiming the actual dollar value of all of your deductible expenses. If you aren't sure which one is the best move for you, here's a quick guide to help you determine your best deduction method.

The standard deduction -- what you need to knowIf you have a lot of deductible items, you're entitled to take them all -- a process known as itemizing. You also have the option of using the standard deduction instead, and taxpayers can choose whichever benefits them the most.

For the 2015 and 2016 tax years, the standard deduction amounts are almost the same, with a slight difference for head of household filers:

Source: IRS

You can take some deductions without itemizingSome deductions are considered adjustments to income -- meaning that you can use these deductions whether or not you choose to itemize. Also known as "above the line" deductions, these can change over time, but currently include such popular deductions as:

• Teacher classroom expenses (up to $250)
• Deductible retirement contributions
• Qualified moving expenses
• Tuition and fees, but you can't also take a credit for these expenses
• Alimony you're required to pay
• Student loan interest

After you take these adjustments to income into account, what's left is known as your adjusted gross income, or AGI.

What deductions can you itemize?Now, there are hundreds of potential deductions, so it's not practical to list them all here. However, here are some of the most common itemized deductions.

• Medical and dental expenses in excess of 10% of your adjusted gross income (AGI)
• State income taxes or state sales taxes, whichever is greater
• Mortgage interest
• Mortgage insurance
• Points you paid on a mortgage
• Charitable contributions both cash and donated property
• Property taxes including those paid for real estate and other personal property
• Interest paid on investments (ex.-margin interest)
• Theft and casualty losses
• Unreimbursed job-related expenses
• Union dues
• Job-related education
• Home office expenses
• Tax preparation fees
• Investment fees and expenses
• Safe deposit box fees
• Gambling losses (although you can only use this to offset winnings, not reduce your other taxable income)

Should you itemize?Unless you have an exceptionally complicated tax situation, in which case you should probably itemize anyway, there is a simple way to determine if the standard deduction is best for you, or if you would be better off itemizing.

Take a look at the list of itemized deductions, and estimate how much you could deduct in each category. If the amount is more than the corresponding standard deduction for your filing status, you should itemize. If the amount is significantly less, the standard deduction is probably the way to go. However, if it's close, it's probable best to thoroughly calculate your itemized deductions to determine the best course of action.

For example, let's say that I'm a single filer and I estimate that I have the following deductions:

• $3,500 in mortgage interest and insurance
• $1,000 in state income taxes
• $1,000 in charitable contributions
• $200 in tax preparation fees
• $1,500 in real estate property taxes

Adding these together gives me a total of $7,200 in deductions. Since this is more than the $6,300 standard deduction I'd be entitled to as a single filer, it would definitely be in my best interest to itemize. If I'm in the 25% tax bracket, the $900 difference would mean an additional $225 off my income tax bill, and keep in mind that this is before any other less-common deductions to which I might be entitled.

The bottom line is that although itemizing your deductions can be time-consuming, it's easy to determine if it's worth trying. When in doubt, it's worth the time to go through the process and calculate your itemized deduction amount, since it could potentially save you hundreds, if not thousands of dollars.

The article Should You Itemize Deductions On Your 2015 Tax Return? originally appeared on Fool.com.

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