Standard vs Itemized Deductions: Guide for Self-Employed (2026)

Here's something many freelancers get wrong: business deductions and personal deductions (standard vs. itemized) are completely separate.

You claim business deductions on Schedule C regardless of whether you take the standard deduction or itemize. The choice only affects personal deductions like mortgage interest, charitable contributions, and state taxes.

This guide clarifies the distinction and helps you choose the right approach.

Understanding the Deduction Types

Business Deductions (Schedule C)

These reduce your self-employment income:

• Home office expenses
• Business travel and mileage
• Equipment and supplies
• Professional services
• Marketing and advertising
• Health insurance (self-employed deduction)

You claim these no matter what. Standard vs. itemized doesn't affect Schedule C deductions.

Personal Deductions (Schedule A or Standard)

These reduce your adjusted gross income:

• Mortgage interest
• State and local taxes (SALT, capped at $10,000)
• Charitable contributions
• Medical expenses (above 7.5% of AGI)
• Casualty losses (limited)

You choose: Take the standard deduction OR itemize these expenses—whichever is larger.

2026 Standard Deduction Amounts

Additional amounts for 65+ or blind.

The math is simple: If your itemized deductions exceed the standard deduction, itemize. If not, take the standard deduction.

Should You Itemize? (Decision Framework)

Calculate Your Itemized Deductions

Compare to Standard Deduction

• Single: Does total exceed $15,000?
• Married Filing Jointly: Does total exceed $30,000?

If yes, itemize. If no, take the standard deduction.

Why Most Freelancers Take Standard Deduction

The $10,000 SALT cap changed everything.

Before 2018:

• State income taxes: Often $5,000-20,000+
• Property taxes: Often $5,000-15,000+
• No cap meant easy itemization for many

After 2018:

• SALT capped at $10,000 total
• Standard deduction nearly doubled
• Most taxpayers now benefit from standard deduction

Example: Single freelancer in California

• State income tax paid: $15,000
• SALT deductible: $10,000 (cap)
• Mortgage interest: $3,000
• Charitable giving: $1,000
• Total itemized: $14,000
• Standard deduction: $15,000
• Better choice: Standard deduction

Situations Where Itemizing Wins

High Mortgage Interest

If mortgage interest alone approaches the standard deduction:

• $500K+ mortgage balance
• Recently purchased home (early years = more interest)
• High-interest rate loans

Significant Charitable Giving

Major charitable contributions can push you over:

• Large cash donations
• Donated appreciated stock
• Charitable bunching strategy

Medical Expenses

Threshold: Expenses exceeding 7.5% of AGI

• Major surgery or medical events
• Ongoing chronic condition treatment
• Out-of-pocket costs before insurance

Combination of Factors

Multiple moderate deductions can combine:

• Some mortgage interest + state taxes + charitable = exceeds standard

Important Clarifications for Self-Employed

Business Deductions Are Separate

Wrong thinking: "I'll take the standard deduction so I can't claim home office."

Right thinking: "I claim home office on Schedule C regardless. Standard vs. itemized is a separate choice."

Self-Employed Health Insurance

Self-employed health insurance is an "above-the-line" deduction—neither itemized nor standard. It reduces AGI directly. Claim it either way.

Half of SE Tax

The deduction for half your self-employment tax is also above-the-line. Claim it regardless of standard vs. itemized choice.

Charitable Giving Strategy: Bunching

For freelancers near the itemization threshold, "bunching" donations can maximize benefits.

How it works:

1. Year 1: Make 2-3 years' worth of charitable contributions

2. Year 1: Itemize (charitable pushes you over standard)

3. Years 2-3: Take standard deduction (larger than remaining itemized)

Example:

• Normal annual giving: $5,000/year
• Three-year giving bunched into Year 1: $15,000

Year 1 (itemize):

• SALT: $10,000
• Mortgage interest: $4,000
• Charitable: $15,000
• Total: $29,000 (exceeds $15,000 standard by $14,000)

Years 2-3 (standard):

• Take $15,000 standard deduction each year

Three-year benefit: $29,000 + $15,000 + $15,000 = $59,000 in deductions

vs. Standard all three years: $15,000 × 3 = $45,000

Extra deductions: $14,000 from bunching strategy

Donor-Advised Funds for Bunching

A donor-advised fund (DAF) makes bunching easier:

1. Contribute lump sum to DAF

2. Get immediate tax deduction

3. Distribute to charities over time

4. Charities receive consistent support

Bonus: Contribute appreciated stock to DAF and avoid capital gains tax on the appreciation.

Common Misconceptions

"Self-employed can't take standard deduction"

False. Self-employed claim business deductions on Schedule C, then choose standard or itemized for personal deductions separately.

"Itemizing is better if you have deductions"

Not necessarily. Only itemize if total itemized exceeds your standard deduction amount.

"Home office requires itemizing"

False. Home office is a business deduction on Schedule C, unrelated to standard vs. itemized choice.

"I should itemize because I pay a lot in state taxes"

Probably not. SALT cap of $10,000 means state taxes alone rarely justify itemizing for most people.

Step-by-Step Decision Process

Step 1: Calculate total Schedule C business deductions (claim these regardless)

Step 2: List potential itemized deductions:

• Mortgage interest: $_____
• SALT (max $10,000): $_____
• Charitable: $_____
• Medical (above 7.5% AGI): $_____
• Total: $_____

Step 3: Compare to standard deduction for your filing status

Step 4: Choose higher amount

Step 5: Consider bunching strategy if close to threshold

Frequently Asked Questions

Do I lose my business deductions if I take the standard deduction?

No. Business deductions on Schedule C are completely separate. You claim them regardless of whether you take the standard deduction or itemize personal deductions.

Can I switch between standard and itemized each year?

Yes. You can make a different choice each year based on that year's circumstances. There's no requirement to be consistent.

What if I'm not sure which is better?

Tax software will calculate both and recommend the higher deduction. When in doubt, input all potential itemized deductions and let the software optimize.

Does standard vs. itemized affect self-employment tax?

No. Self-employment tax is calculated on Schedule SE based on Schedule C net income. The standard vs. itemized choice affects income tax only.

Maximize All Your Deductions

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