| It's a crucial decision while filing your tax return ? | | | | Well you can refer to a special table which is available |
| whether to go for standard deduction or claim itemized | | | | in the instructions for Form 1040. You can also refer to |
| deductions. The selection depends on certain | | | | IRS publication 501 to get the exact amount of higher |
| conditions and limitations applicable to you specifically. | | | | standard deduction applicable to you. |
| Let us first discuss about those taxpayers who cannot | | | | Now lets turn to the option of itemized deductions. You |
| claim the standard deduction. The following persons | | | | can go for this option if your expenses during the year |
| can't claim standard deduction:a. Persons married and | | | | under the following categories are very significant: |
| filing separately with their spouse opting for itemized | | | | ? Your medical and dental expenses |
| deductions. So both of you can either itemize or can | | | | ? The amount of charitable contributions you made |
| go for standard deduction.b. Taxpayers filing their | | | | during the year |
| return for a short year, because of a change in their | | | | ? The expenses which remain un-reimbursed from |
| annual accounting period.c. Taxpayers who were | | | | your employer |
| non-resident for part of the year or aliens having duels | | | | ? There are casualty and theft losses during the year |
| status for part of the year. | | | | ? You pay state and local income taxes |
| People whose standard deduction is limited. | | | | ? You pay taxes on real estate or personal property |
| If you are / can be claimed as a dependent on the tax | | | | taxes |
| return of another person, then your standard deduction | | | | You should always make comparative calculation to |
| is limited to $800 or $250 plus your income earned for | | | | select between the two options. |
| the year, whichever is higher. In any case the amount | | | | If you decide to claim itemized deductions, remember |
| of standard deduction cannot exceed the regular limit | | | | the following limitations |
| of standard deduction available. | | | | ? Total expenses under itemized deductions have to |
| Standard deduction for people over 65 or who are | | | | exceed 7.5% of your AGI. |
| blind | | | | ? The expenses un-reimbursed by your employer and |
| If you are over 65 at the end of the year, your | | | | other miscellaneous expenses are restricted to 2% of |
| standard deduction will be higher. Even though on | | | | AGI. |
| January 1 of the next year you turned 65, then you | | | | ? You need to look into the provisions of AMT |
| are considered of the age of 65 for the previous year. | | | | (Alternative Minimum Tax) ? that means if your AGI |
| Standard deduction for blind people | | | | goes above a certain limit, then the overall amount of |
| If you are blind during or on the last day of the year, | | | | itemized deductions is limited. |
| you can claim a higher standard deduction. You can | | | | If your adjusted gross income (AGI) is higher, then it will |
| also claim higher standard deduction if you are partially | | | | be difficult for you to come about the threshold of |
| blind. However, an eye doctor must certify that either | | | | 7.5% of AGI. If your AGI is lower and expenses are |
| your field of vision is less than 20 degrees, or you | | | | higher during the year, than it is a clear-cut case of |
| cannot see more than 20/200 with your better eye | | | | itemizing. |
| either with glasses or with contact lenses. | | | | Every year you must calculate your taxes under bold |
| If your spouse over 65 are a blind | | | | these options to see which one is good for you. |
| If your spouse is either over 65 or blind, and if you are | | | | You always have a choice of filing an amended return |
| filing jointly then you can get a higher standard | | | | subsequently if you find that you made a mistake in |
| deduction. | | | | selecting a particular option. This choice is available for |
| How much higher? | | | | three years from the date you file your return. |