Arsthbt

For 2018 the standard deduction is $12,000 for individuals, $24,000 per household. If someone's itemized deductions equals the standard deduction, or is very close, which one is better to take?

For example, my understanding is if you itemize, then your state refund will be taxable, but not if you take the standard deduction. That makes the standard deduction sound like the better option. Are there reasons I might want to itemize instead, perhaps certain personal or business tax credits are treated more favorably later if I do?

Another reason to use standard: audit

If you get selected for an audit of your itemized deduction or a specific category (e.g. all medical expenses or all charitable contributions) then at best you have the time to send in all the receipts, and then answer questions about some. At worst, the auditor disallows something and now your itemized is less than the standard.

Standard is set and done. If your itemized equals the standard, take the standard.

Yes, it seems what you've linked is also stated here:

If you took a standard deduction last year or itemized deductions but did not itemize the amount of your state income tax, then your state tax refund from the prior year is not taxable.

It seems like they're really incentivizing taking the standard deduction over itemizing this year. I would take the standard deduction if the itemized deductions don't save you more than $100. It saves you time and effort, right? It also saves you the hassle of saving receipts for 7+ years just in case.

I'm not an expert, but everything seems to indicate they're equivalent. Nothing or almost nothing in the tax code should depend on whether you itemized or not.

The state tax refund is really a reflection on whether you itemized last year. If you itemized (including state taxes) for a total of $12,100 of deductions, and later you get a state refund for $200, the IRS takes this as a sign that you should only have deducted 11,900. So, this year, the $200 refund will be treated as taxable income.

Does this mean you should have taken the standard deduction instead? Probably, but it might depend on your personal circumstances (e.g. tax bracket changes), and whether you know the amount you'll get refunded in advance.

You'd have to determine what portion of the state tax refund will be taxable after the deduction to know whether or not itemizing is worth it, but you are right that in some cases it could be better to take standard deduction even if itemized is slightly higher due to this taxable state refund issue.

Interestingly, it can actually make sense to itemize even with deductions lower than the standard deduction. For example, in Maryland you cannot itemize at the state level unless you itemized at the federal level. For some people this has meant a lower combined state/federal tax burden when they take itemized deductions below standard deduction, because the decrease in state tax burden has made up for the increase in federal tax burden. This issue was highlighted in this question which shows the tax software making a poor suggestion.