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How is the standard deductions different from schedule A itemized deductions?

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OK, let’s just break it down and see what a Standard Deduction is first of all. I usually explain it to clients comparing it to a discount. Even though it is not a discount it is easiest to look at it that way at first. Standard Deduction is an amount that reduces taxpayer’s tax liability. Your Standard Deduction is determined based on your filing status (i.e. single, married filing jointly etc.) and is adjusted based on inflation each year so I am not going to post numbers since they will change every year. It’s best to Google those numbers. Now, if you were to add up your deductions and they would exceed the Standard Deduction you can itemize. Example: For 2011 a Married Couple filing jointly the Standard Deduction is $11,600. If this couple were to add their own deductions and if the sum would exceed $11,600, it would make sense for them to itemize since it would result in less federal income tax liability.

If another person is eligible to claim you as a dependent on their tax return, your Standard Deduction may be limited.

Some persons won’t be eligible for a Standard Deduction

  • You are married but choose to file a separate tax returns and your spouse itemizes deductions
  • You are a dual-status alien or nonresident during the year. You are considered a dual-status alien if you were both an alien and a resident alien during the tax year. Now, if you are a nonresident but are married to a US Resident or a US citizen, you have the option to choose to be treated as a US Resident.
  • Those who will not qualify for a Standard Deduction should itemize on schedule A.

Final return for a decedent

The Standard Deduction for a deceased person does not change, i.e. it should be filed as if he had continued on living.

High Standard Deduction for Taxpayers who are 65 or older

The Standard Deduction is higher for persons who are 65 or older and for persons who are blind.

If you choose not to itemize your deductions, take the Standard Deduction and are 65 or older, your Standard Deduction is $1,150 higher if you are single or married filing separately. It is $1,450 higher if you are Single or Head of Household. Once again these numbers will change each year.

If you are claimed as a dependent on someone else’s tax return your Standard deduction is the greater of $950 or you earned income plus $300 (but not more than your standard deduction “would be” say $5,800 for single persons)

You should itemize when:

  • You do not qualify for the Standard deduction
  • You had large medical or dental expenses that were not covered or reimbursed by insurance
  • You paid local or state taxes
  • Paid mortgage interest or property taxes
  • You had employee business expenses that were not reimbursed to you by your employer
  • Had casualty or theft losses that were not covered or reimbursed by insurance
  • Had large charitable contributions

Written by David Ghazaryan

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