Tuesday, January 9, 2007

SHOULD YOU ITEMIZE YOUR DEDUCTIONS?

*SHOULD YOU ITEMIZE? *

Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. Money paid for medical care, mortgage interest, taxes, charitable contributions, casualty losses, and miscellaneous deductions can reduce your taxes. If the total amount spent on those categories is more than the standard deduction, you can usually benefit by itemizing.
The standard deduction amounts are based on your filing status and are subject to inflation adjustments each year. For 2006, they are:
· Single $5,150
· Married Filing Jointly $10,300
· Head of Household $7,550
· Married Filing Separately $5,150

Some taxpayers have different standard deductions. The standard deduction is more for taxpayers age 65 or older and for those who are blind. It is generally less for those who can be claimed as a dependent on some other taxpayer’s return.

Limited itemized deductions. Your itemized deductions may be limited if your adjusted gross income is more than $150,500 or $75,250 for Married Filing Separately. This limit applies to all itemized deductions except medical and dental expenses, casualty and theft losses, gambling losses, and investment interest.
Stipulations for Married Filing Separately. When a married couple files separate returns and one spouse itemizes deductions, the other spouse must also itemize and cannot claim the standard deduction.

Some taxpayers are not eligible for the standard deduction. They include nonresident aliens, dual-status aliens, and individuals who file returns for periods of less than 12 months.
Forms to use. To itemize your deductions, use Form 1040, U.S. Individual Income Tax Return, and Schedule A, Itemized Deductions.
Taxxcpa comment:
DON’T FORGET: Sometimes it pays to alternate between the standard deduction and itemizing. If your Real Estate tax is all that puts your itemized deductions above the standard deduction, then you might pay your 2006 tax in January 2007 and pay your 2007 tax in December 2007. This would not be advisable if you have enough to itemize even if you had no real estate tax.
LINKS and Other IRS References and Resources
http://docs.google.com/View?docid=dch9s27g_13f4m7ph

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This information is not intended to be advice to the recipient. In compliance with Treasury Department Circular 230, unless stated to the contrary, any Federal Tax advice contained in this Blog was not intended or written to be used and cannot be used for the purposes of avoiding penalties.

5 comments:

Anonymous said...

Hello TAXXCPA,

Thanks so much for making this blog available. I was directed here from Ulli's Blog, where I posted a question for you. I posted it there as it has to do with deductibility of investment management fees on a tax deferred account (such as an IRA or Var. Anuity) and Ulli is an investment advisor. So I thought the topic might be of more interest to Ulli's clients, reading his board, etc. Thanks in advance for any consideration extended.
Best Regards, Jim

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Anonymous said...

Nice post and this enter helped me alot in my college assignement. Say thank you you for your information.

Anonymous said...

You have to express more your opinion to attract more readers, because just a video or plain text without any personal approach is not that valuable. But it is just form my point of view

taxxcpa said...

The only opinions that affect your taxes is the opinion of the legislators who pass the laws.

However, you are right in that people like to read opinions. I may have posted a few opinions in the past and it would be a good way for me to come up with blog material.
I'll give it a shot.