Tax season is quickly approaching as W-2s begin to appear in our mailboxes. One major questions that arises during tax time is whether or not to itemize. The answer to this question depends on how much money you spent on certain expenses last year. The expenses covered under this umbrella include mortgage interest, medical care, taxes, charitable contributions, casualty losses, and other miscellaneous deductions. If the total amount spent in these categories exceeds the standard deduction, then itemizing your taxes could save you money!

For 2006, the standard deductions are:
Single $5,150
Married Filing Jointly $10,300
Head of Household $7,550
Married Filing Separately $5,150

The IRS also offers several other tips for those considering itemizing their taxes:

1. Some taxpayers have different standard deductions. The standard deduction is more for taxpayers age 65 or older and for those who are blind. It is generally less for those who can be claimed as a dependent on some other taxpayer’s return.

2. Limited itemized deductions. Your itemized deductions may be limited if your adjusted gross income is more than $150,500 or $75,250 for Married Filing Separately. This limit applies to all itemized deductions except medical and dental expenses, casualty and theft losses, gambling losses, and investment interest.

3. Stipulations for Married Filing Separately. When a married couple files separate returns and one spouse itemizes deductions, the other spouse must also itemize and cannot claim the standard deduction.

4. Some taxpayers are not eligible for the standard deduction. They include nonresident aliens, dual-status aliens, and individuals who file returns for periods of less than 12 months.

5. Forms to use. To itemize your deductions, use Form 1040, U.S. Individual Income Tax Return, and Schedule A, Itemized Deductions.

All in all, this decision could save you a lot of money come tax time, especially if you made any large purchases that fall under these categories. So remember to add up your bills - it could save you a lot of money!