It does not pay to itemize unless the total amount of your allowable deductions exceeds the standard deduction that applies to your filing status, plus any additions for age or blindness.
For 2008 The Standard Deduction amounts are:
· $ 5,450.00 for Single
· $10,900.00 for Married Filing Joint Return and Qualifying Widow(er)
· $ 8,000.00 for Head of Household
· $ 5,450.00 for Married Filing Separate Return
The additional standard deduction amounts for age 65 and older and/or blind are:
· $1,350.00 for Single and Head of Household
· $1,050.00 for for Married (Joint and Separate) and Qualifying Widow(er)
The standard deduction for a dependent is the greater of $900.00 or the sum of $300.00 and the dependent's earned income, not to exceed $5,450.00 (plus $1,350.00 if age 65 or blind).
For the first time taxpayers who do not itemize can deduct as an additional standard deduction up to $500 ($1,000 if Married Filing Joint) for Real Estate Taxes paid on the 2008 Form 1040 (or 1040A). You would indicate that you are including this additional amount in your Standard Deduction by checking Box 39c on Form 1040 or Box 23c on Form 1040A.
So if you are a married couple filing a joint return and the total of your allowable itemized deductions for 2008 are $10,500 you are better off my claiming the standard deduction. However be sure you are aware of all the “itemizeable” deductions to which you are entitled before making the decision. Various online resources provide information on what you can and cannot deduct. For example there is “Itemized Deductions: Lower Your Taxes by Claiming Tax Deductions” from William Perez at about.com. I have written two special reports that discuss medical and charitable deductions – click here. You may want to review the issue with your tax professional.
Even if you are not normally able to itemize you should keep good records of all your “itemizeable” deductions during the year. You never know if a special situation will push you “over the top”.
There are situations where even if your total allowable deductions do not exceed your standard deduction you may still elect to itemize.
If you are a victim of the dreaded Alternative Minimum Tax (AMT) the standard deduction is not allowed. However, you can deduct medical expenses in excess of 10% of your AGI, mortgage and home equity interest on borrowings used to buy, build or improve your primary or qualified second home, charitable contributions, casualty and theft losses, gambling losses, and certain other Schedule A items in calculating the Alternative Minimum Tax, but you must itemize under “regular” income tax to be able to do so.
Itemizing with less than the standard deduction could, in certain instances, provide a tax-savings on your state income tax return.
In the case of a married couple filing separate returns, if one spouse itemizes on his or her separate return, the other spouse must also itemize.
TTFN
For 2008 The Standard Deduction amounts are:
· $ 5,450.00 for Single
· $10,900.00 for Married Filing Joint Return and Qualifying Widow(er)
· $ 8,000.00 for Head of Household
· $ 5,450.00 for Married Filing Separate Return
The additional standard deduction amounts for age 65 and older and/or blind are:
· $1,350.00 for Single and Head of Household
· $1,050.00 for for Married (Joint and Separate) and Qualifying Widow(er)
The standard deduction for a dependent is the greater of $900.00 or the sum of $300.00 and the dependent's earned income, not to exceed $5,450.00 (plus $1,350.00 if age 65 or blind).
For the first time taxpayers who do not itemize can deduct as an additional standard deduction up to $500 ($1,000 if Married Filing Joint) for Real Estate Taxes paid on the 2008 Form 1040 (or 1040A). You would indicate that you are including this additional amount in your Standard Deduction by checking Box 39c on Form 1040 or Box 23c on Form 1040A.
So if you are a married couple filing a joint return and the total of your allowable itemized deductions for 2008 are $10,500 you are better off my claiming the standard deduction. However be sure you are aware of all the “itemizeable” deductions to which you are entitled before making the decision. Various online resources provide information on what you can and cannot deduct. For example there is “Itemized Deductions: Lower Your Taxes by Claiming Tax Deductions” from William Perez at about.com. I have written two special reports that discuss medical and charitable deductions – click here. You may want to review the issue with your tax professional.
Even if you are not normally able to itemize you should keep good records of all your “itemizeable” deductions during the year. You never know if a special situation will push you “over the top”.
There are situations where even if your total allowable deductions do not exceed your standard deduction you may still elect to itemize.
If you are a victim of the dreaded Alternative Minimum Tax (AMT) the standard deduction is not allowed. However, you can deduct medical expenses in excess of 10% of your AGI, mortgage and home equity interest on borrowings used to buy, build or improve your primary or qualified second home, charitable contributions, casualty and theft losses, gambling losses, and certain other Schedule A items in calculating the Alternative Minimum Tax, but you must itemize under “regular” income tax to be able to do so.
Itemizing with less than the standard deduction could, in certain instances, provide a tax-savings on your state income tax return.
In the case of a married couple filing separate returns, if one spouse itemizes on his or her separate return, the other spouse must also itemize.
TTFN
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