When Itemized Deduction is Better Than Standard Deduction ?

itemized deductions

itemized deductionsThere are two ways an Individual can claim deductions under Internal Revenue Code while filing tax return- either by claiming standard deduction or the intemized deduction. If you can claim standard deduction or itemized deduction , itemized deduction option ( on schedule A of Form 1040 ) will logically be better if it gives you more deduction than the standard deduction .

Major itemized  deduction are :

Under itemized deductions, a tax payer can deduct

  1. his/her medical and dental expenses
  2. unreimbursed employee business expenses,
  3. certain payments of taxes,
  4. interest,
  5. contributions to charities ,
  6. miscellaneous expenses.
  7. certain casualty and theft losses

As you know the maximum itemized deduction is fixed and also based on your adjusted gross income , itemized deduction may  be reduced or phased out if the adjusted gross income is more than the following threshold ( For tax year  2016 )

  • Single – $259,400
  • Married filing jointly or qualifying widow(er) – $311,300
  • Married filing separately – $155,650
  • Head of household – $285,350

But there are cases, when the option for standard deductions are not available !

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10 Job Related Deductions Under IRC ,Every Employee Must Know About!

job-related-deductionsInternal Revenue Code allows workers and employees certain deductions that are nencessry for carrying out jobs assigned to them .In other words , certain types of job-related expenses that are not reimbursed by the employer but incurred by an employee  for the purpose of job might qualify for deductions  from taxable income under certain conditions .

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Getting Home Improvements Costs as Medical Expense Deduction !

home-improvement-medical-deductionIf you or your spouse of specified dependents are facing medical challenege on account of aging or any disese or aging or for any purpose , it should be known that Sec. 213(a) of Internal Revenue Code allows deduction of home imporvements linked to medical care on self  , one’s spouse, or a specified dependent as defined in Sec. 152 . It has been held by Court held that  an expense on home improvement medical deduction allowed only if  one shows that the expense was part of  an essential element of treatment and would not have otherwise been incurred for nonmedical reasons (Refer Jacobs, 62 T.C. 813 (1974)). 

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Who Needs to Renew ITIN Immediately?

Like - Click this link to Add this page to your bookmarks Share - Click this link to Share this page through email or social media Print - Click this link to Print this page Individual Taxpayer Identification Number

Like - Click this link to Add this page to your bookmarks Share - Click this link to Share this page through email or social media Print - Click this link to Print this page Individual Taxpayer Identification NumberIndividual Tax Identification Number or ITIN is soon going to expire for many taxpayers, and IRS has issued a reminder on 18th October 2016 that taxpayers whose ITIN is expiring can begin submitting their ITIN renewal applications to the IRS. This post is explaining the importance of ITIN , why the ITIN expired for some .

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IRS Tax Bracket for 2017

tax-bracket-for-2017Everyone needs to file tax return ( unless you fall among those who do not require to file tax return)  after paying tax . For that you need to visit the tax bracket annouced by IRS . This year also , IRS annouced new tax bracket applicable for the year 2017 . Some key provisions and tax rate brackets amounts that have changed or stayed the same for the 2017 tax year are Tax brackets, Standard deduction,Personal exemption,Itemized deductions,alernative minimum tax, Earned Income Tax Credit, Lifetime Learning Credit. …
Adoption Tax Credit. Here is  the new tax bracket for the year 2017

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Who Are Exempt Individuals Under US Tax Residency Laws ?

exempt individualsExempt individuals are certain types of individuals whose physical presence in USA is not counted fro tax residencey purpose .In earlier articles on tax residency , readers were informed that for determining the tax residency , a substantial presence test is done to determine if the person concerned was in USA for specific number of days .It was also stressed that certain physical presence days are not counted or exempt days for determination of tax residency under Internal Revenue Code. Apart from exempt days , US tax law provides that number of days of presence of certain individuals may may not count for determining the number of days of substantial presence in USA. This benefit is allowed to very limited number of persons referred as exempt Individuals. 

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How to Know Your Filing Status ?

filing statusFiling of tax return under US tax law requires that you first ascertain your filing status. Under the Internal Revenue Code , there are five types of status under which you can file tax return. Filing status will actually determine what  tax rate or the the basic tax exemption or standard deductions and a whole lots of other relief and conditions  applies to you. So , this post is devoted on the ways you can find out exact filing status that applies to you .

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Tax Effect of Nonresident Alien Spouse Chosen As Tax Resident of US Simplified !

nonresident alienInternal Revenue Code allows a US citizen or a resident alien to treat his/her spouse as tax resident of US . This is an option granted to him/her. There maybe various situation in which during a tax year, one spouse is nonresident alien and one is resident alien . Choosing your partner (spouse ) who is nonresident as tax resident of USA may effect your taxation and also certain other legal obligation arise. 

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How to Find if You Are Tax Resident of USA ?

residential statusIn order to determine the  tax laibility of a persons who visits USA or stays in USA or works in USA or earns any income connected to USA , the first and foremost creteria is to find out the residential status of the person as per Internal Revenue Code . This is so , because the law for residents anbd non -residents are quite different. So , how do you determine if you are resident as per US tax laws ? Well the Internal Revenue Code (26 US Code )  7701

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