Form 1040: Standard Deduction vs. Itemizing: What Should You Do for Your 2026 Tax Return?

Tax season can feel much easier when you know what information to keep throughout the year. One of the decisions you may make when preparing your federal tax return is whether to take the standard deduction or itemize your deductions on Schedule A.

The good news? You generally don't need to decide on your own. Ultiemily Advisory Services or an outside tax provider can compare the two options and determine which provides the greater tax benefit.

The important part is making sure you have the records needed to make that comparison.

What Is the Standard Deduction?

The standard deduction is a set amount that reduces your taxable income. You can take the standard deduction without listing individual expenses or providing receipts for each deduction.

For many taxpayers, the standard deduction is the simplest and most beneficial option.

For tax year 2026, the standard deduction is:

Filing Status	2026 Standard Deduction
Single	$16,100
Married Filing Separately	$16,100
Head of Household	$24,150
Married Filing Jointly	$32,200
Qualifying Surviving Spouse	$32,200

If your potential itemized deductions are less than the standard deduction, taking the standard deduction will generally provide the greater tax benefit.

The One Big Beautiful Bill Act (OBBA) increased the standard deduction and made changes that limit certain itemized deductions. However, if you own a home, itemizing may still provide a larger deduction. Homeownership may not be the only way you get to itemize now that the state and local tax (SALT) deduction cap increased to $40,000 for married couples filing jointly, compared with the previous $10,000 limit.

What Does It Mean to Itemize?

When you itemize, instead of taking the standard deduction, you add up certain expenses that qualify as deductions and report them on Schedule A.

Common itemized deductions can include:

• Medical and dental expenses

• Certain state and local taxes

• Real estate taxes

• Mortgage interest

• Investment interest

• Charitable contributions

• Certain casualty or theft losses

• Other deductions subject to specific rules and limitations

You generally want to consider itemizing when your eligible deductions are greater than your standard deduction.

Why Should You Keep Your Records Even If You Usually Take the Standard Deduction?

Your tax situation can change from year to year.

For example, you might have:

• Purchased a home

• Paid significant medical expenses

• Made larger charitable donations

• Paid substantial state or local taxes

• Experienced a qualifying casualty loss

Even if you normally take the standard deduction, keeping your records allows your tax preparer to determine which option is best for you.

Common Itemized Deductions and What to Keep

1. Medical and Dental Expenses

Certain unreimbursed medical and dental expenses may qualify as itemized deductions. However, there are limitations, including the requirement that qualifying expenses generally must exceed 7.5% of your adjusted gross income (AGI) before the excess is deductible.

You say what is AGI, these are all incomes associated with your return, as discussed in the blog Form 1040: What Income to Report and a Practical Pre-Filing Checklist. We will also dive deeper into this category next week: additional income streams outside of wages and investments.

Potential expenses can include:

• Doctor and hospital bills

• Prescription medications

• Certain medical equipment

• Qualifying insurance premiums

• Certain medical transportation expenses

Keep:

• Medical bills

• Receipts

• Insurance Explanation of Benefits (EOBs)

• Credit card or bank statements showing payment

• Mileage records for qualifying medical trips

• Prescriptions or other supporting documentation when appropriate

Tip: Don't throw away medical receipts just because insurance paid part of the bill. Keep documentation showing what you actually paid.

2. State and Local Taxes

Certain taxes you pay during the year may qualify as itemized deductions.

These can include:

• State and local income taxes

• Real estate taxes

• Certain personal property taxes

• General sales taxes, when applicable under the rules

There are limits that may apply, so your tax preparer should determine how much is actually deductible.

Keep:

• Property tax bills

• Proof of property tax payments

• State and local tax records

• Relevant Forms 1099-G

• Receipts and records if using actual sales tax instead of state income tax

3. Mortgage Interest

If you own a home, you may receive Form 1098 from your mortgage lender reporting mortgage interest paid during the year.

Depending on your situation, mortgage interest and certain points may be deductible.

Keep:

• Form 1098

• Closing or settlement statements

• Mortgage documents

• Bank records or cancelled checks

• Documentation showing how loan proceeds were used

Year-end tip: Make sure you provide your tax preparer with your final mortgage Form 1098 when you receive it.

4. Investment Interest 

If you borrowed money to purchase investments, some of the interest you paid may qualify as an investment interest deduction.

There are limitations based on your investment income.

Keep:

• Loan statements

• Brokerage statements

• Form 1099-INT

• Records of investment income

• Documentation showing the purpose of the loan

5. Charitable Contributions

Charitable donations are another area where good recordkeeping is especially important.

Contributions can include:

• Cash donations

• Donations made by credit card

• Clothing and household goods

• Appreciated property

• Certain out-of-pocket expenses related to volunteering

Different documentation requirements apply depending on the amount and type of donation.

For example, cash contributions of $250 or more generally require a contemporaneous written acknowledgment from the charitable organization. Larger noncash contributions can require additional documentation and, in some circumstances, an appraisal and Form 8283.

Keep:

• Charity receipts

• Written acknowledgments

• Bank or credit card statements

• Donation lists

• Descriptions of donated property

• Appraisals when required

Tip: Don't wait until tax season to recreate your charitable donations. Keep the documentation as you make the donations.

A new provision for 2026 allows non-itemizers to deduct charitable contributions directly from their adjusted gross income (AGI). Individuals can deduct up to $1,000, while married couples filing jointly can deduct up to $2,000 in qualifying charitable contributions.

6. Casualty and Theft Losses

Certain casualty or theft losses may qualify for a deduction, although special rules apply.

Keep:

• Police reports

• Insurance claim information

• Insurance settlement documents

• Photos of damaged property

• Repair estimates and receipts

• Appraisals when appropriate

If you experience a significant loss during the year, contact your tax professional before assuming that the loss is deductible.

What Records Should You Keep?

A good rule is:

If you think an expense might affect your tax return, keep the documentation until your tax preparer has had an opportunity to review it.

Useful records can include:

• Mortgage Forms 1098

• Property tax statements

• Bank statements

• Credit card statements

• Donation receipts

• Medical receipts

• Insurance documentation

• Closing statements

• Records supporting tax deductions and carryovers

Year-End Tax Preparation Checklist

Before the year ends, take a few minutes to organize your tax information. This can make tax season significantly easier.

Medical Expenses

☐ Gather medical and dental receipts

☐ Save insurance EOBs

☐ Gather prescription and medical expense records

☐ Maintain a mileage log for qualifying medical travel

Taxes

☐ Gather property tax bills and proof of payment

☐ Gather state and local tax information

☐ Save relevant 1099-G forms

☐ Keep sales tax records if applicable

Home and Mortgage

☐ Save your Form 1098

☐ Keep mortgage statements

☐ Keep closing documents for any home purchase or refinance

☐ Keep records of significant home improvements

Charitable Contributions

☐ Gather receipts for cash donations

☐ Obtain written acknowledgments for donations of $250 or more

☐ Keep documentation for donated clothing and household goods

☐ Obtain appraisals when required for larger noncash contributions

☐ Keep records of volunteer-related expenses that may qualify

Investments

☐ Gather brokerage statements

☐ Gather Forms 1099-INT and other investment tax documents

☐ Keep records of investment-related interest expenses

☐ Keep documentation for investment purchases and sales

Other Important Records

☐ Keep documentation for casualty or theft losses

☐ Review any carryforwards from previous tax returns

☐ Keep records showing the date, amount, payee, and purpose of deductible expenses

☐ Organize everything in one secure location for tax season

Final Thought: Don't Wait Until Tax Season

Tax preparation starts before you sit down to prepare your return.

You don't need to know whether you will itemize or take the standard deduction today. Your job is to keep good records. Your tax professional can then review your information and determine which deductions and filing options may provide the best result.

A little organization throughout the year can mean less stress, fewer missing documents, and a smoother tax preparation process.

If you're unsure whether an expense is deductible, keep the documentation and ask your tax professional. It's much easier to decide that an expense doesn't qualify than to try to find a missing receipt months later.