Final answer:
The Andersons should list all potential deductions and sum them up; if the total exceeds $24,000, they should itemize, otherwise taking the standard deduction is better.
Step-by-step explanation:
To determine the Andersons' total itemized deductions and decide whether they should itemize or take the standard deduction, we must look at all the potential itemizable expenses they could claim. These expenses typically include medical and dental expenses exceeding a certain percentage of adjusted gross income (AGI), state and local taxes up to $10,000, interest paid on mortgages, charitable contributions, and casualty and theft losses, among others. After listing all the deductible expenses, the sum should be compared against the standard deduction amount of $24,000 for a married couple filing jointly.
However, in essence, if their total itemizable deductions are more than the standard deduction, they should itemize; otherwise, they are better off taking the standard deduction.
Furthermore, understanding taxable income is crucial as it informs the decision-making process. Taxable income is the adjusted gross income minus deductions and exemptions, which affects the marginal and average tax rates. Keeping an organized record of potential deductions can simplify this process and potentially reduce tax liability.