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Should I Itemize Deductions??

Each taxpayer is allowed a "standard deduction," based on their filing status. The standard deductions are:
    2001

Single

$ 4,550

Married Joint

$ 7,600

Head of Household

$ 6,650

Married Separate

$ 3,800

ONLY if your allowable itemized deductions EXCEED this amount for your status would it make sense to itemize deductions on Schedule A. Otherwise, the standard deduction will result in the lower tax.

The general categories of itemized deductions, along with any limitations, are as follows:

MEDICAL EXPENSES paid out of pocket for you, your spouse and any dependent includes medical insurance taken out of your paycheck, but NOT if on a "pretax" basis  (Note: This category is reduced by 7 1/2% of you AGI before adding into Schedule A total!)

TAXES state and local income taxes. Foreign taxes, if you don't instead claim the credit for them. Real and personal property taxes, assessed annually and based on value of property.

INTEREST secured debt on your first or second home (Some limits apply) interest used to buy investments that will generate taxable investment income (See Form 4952 for calculation and possible limitation)

CONTRIBUTIONS to a church or recognized charity organization, to the extent that you do NOT receive anything back in exchange. Also out-of-pocket costs of doing volunteer work for such organizations.


CASUALTY or THEFT LOSS
not covered by insurance (You must put in a claim, if you have insurance.) (Note: Each personal casualty or theft loss incident is only deductible to the extent it exceeds 10% of your AGI. See Form 4684 for calculation.)

INVESTMENT, INCOME PRODUCING or EMPLOYEE EXPENSES (Note: This category is reduced by 2% of your AGI before adding into Schedule A total.)

 

 

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Disclaimer
We do not offer legal advice. All information provided on this website is for informational purposes only and is not a substitute for proper legal advice. If you have legal questions, we recommend that you seek the advice of legal professionals.

Tax Disclaimer: To ensure compliance with IRS Rules, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.

Copyright 2017 Wink Tax Services / Wink Inc.
Last modified: January 30, 2017