Tax Talk: Standard vs. Itemized: What You Need to Know

Welcome back to the Dollar Wise Podcast. In this episode, Andrew and Brett break down below-the-line tax deductions. They’re offering practical explanations and examples to help you understand how these deductions really work. 

They’re talking:

• The difference between standard and itemized deductions
• Key itemized categories like mortgage interest, state and local taxes, charitable giving, and medical expenses 
• And diving into niche areas like gambling losses and casualty losses. 

Whether you’re filing solo or jointly, this episode equips you with the tools to make more informed tax decisions.

Tune in to learn:

• The distinction between standard and itemized deductions.
• Key categories that qualify for itemized deductions.
• Why the standard deduction may be the better choice for most taxpayers.
• How niche deductions like gambling or casualty losses may apply to you.

Timestamps of topics: 

• [00:00:45] Overview of below-the-line tax deductions and what “the line” refers to.
• [00:02:21] What the standard deduction is, how it works, and current deduction amounts.
• [00:03:36] Introduction to itemized deductions and how to decide between the two options.
• [00:04:51] Mortgage interest as a deductible expense and related loan qualifications.
• [00:05:55] State and local tax (SALT) deductions and recent changes to the cap.
• [00:07:27] Charitable contributions and which types of donations qualify.
• [00:08:13] Medical and dental deductions, including niche examples.
• [00:09:28] Gambling losses and how tax offsets now work differently.
• [00:10:50] Casualty losses in federally declared disaster areas.
• [00:12:26] Final recap of how to decide between standard and itemized deductions.

3 Key Takeaways

1. You can only take one: either the standard deduction or itemized deductions  (whichever is higher).
2. Itemized deductions include categories like mortgage interest, SALT taxes, charity, and medical expenses.
3. Uncommon deductions, like gambling losses or casualty losses, may apply in specific situations and should be reviewed with a tax professional. 

Memorable moments:

(00:04:51) “You can’t take out money in the form of a home equity line of credit to go on a vacation and deduct the interest. No, no Ferraris with your home.”

(00:09:28) “We might be if you have an obscure ailment that you think can help you write off an in-ground swimming pool — we’d love to hear about it.”

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HFM Investment Advisors, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. All investments involve risk and are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as a recommendation appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment advisor to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.