For Many, Itemizing Can Lower Tax Liability, Increase Refund
VIRGINIA BEACH, VA -- (Marketwired) -- 03/18/15 --
Liberty Tax, Inc. (NASDAQ: TAX) -- Millions of Americans overpay their income tax each year because they make a quick and easy mistake -- they choose the standard deduction. Itemized deductions take more time and effort, but they can pay off in the long run by returning to taxpayers more of the hard-earned money they deserve, according to Liberty Tax.
"Most of the errors on individual tax returns are errors of commission as opposed to omission," said John T. Hewitt, CEO of Liberty Tax. "A little more time and energy devoted to the tax return can pay off for many taxpayers."
The standard deduction does not allow taxpayers who pay mortgage interest and points or state and local income taxes or medical bills to calculate those deductions. Instead, the taxpayer opts to take a set amount. For the 2014 tax year, the standard deduction is $6,200 for single taxpayers, $9,100 for heads of household, and $12,400 or those married filing jointly.
When taxpayers itemize and include their deductions, they lower their tax liability and increase their tax refund -- sometimes significantly. A Government Accountability Office report, "Taxpayers Who May Have Overpaid Federal Taxes by Not Itemizing," estimated that almost 70 percent of all individual taxpayers took the standard deduction, and more than 2 million collectively overpaid the government by $945 million because they did not itemize although they were eligible for deductions. About 24 percent overpaid by $500 or more.
The report was published in 2002, but taxpayer patterns have not changed dramatically. In tax year 2012, nearly two-thirds of all individual taxpayers took the standard deduction.
"No one wants to overpay the IRS, and no one should," said Hewitt. "A qualified tax preparer can help ensure that taxpayers get what they deserve."
About Liberty Tax, Inc.
Founded in 1997 by CEO John T. Hewitt, Liberty Tax, Inc. (NASDAQ: TAX) is the parent company of Liberty Tax Service. Liberty Tax is one of the fastest-growing tax preparation franchises and has prepared almost 18 million individual income tax returns in more than 4,300 offices and online. Liberty Tax's online services are available through eSmart Tax, Liberty Online and DIY Tax, and are all backed by the tax professionals at Liberty Tax locations and its nationwide network of approximately 35,000 seasonal tax preparers. Liberty Tax also supports local communities with fundraising endeavors and contributes as a national sponsor for many charitable causes. For a more in-depth look, visit Liberty Tax Service and interact with Liberty Tax on Twitter and Facebook.
Source: Liberty Tax Inc.