There 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
- his/her medical and dental expenses
- unreimbursed employee business expenses,
- certain payments of taxes,
- contributions to charities ,
- miscellaneous expenses.
- 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 !
When claiming itemized deduction is the only option ?
In following situation , you can not opt for standard deduction even if you wish. So only option as far as claiming deduction is concerned is the itemized deductions. These situations are :
- You are a married individual , filing as married filing separately and your spouse itemizes deductions.
- you file tax return for a period of less than 12 months because of a change in your annual accounting period.
- You are a nonresident alien or a dual-status alien during the year not married to a us citizen.
- An estate or trust, common trust fund, or partnership;
When opting itemized deduction may be better ?
Apart from the two reason , itemized deduction is more or you are not able to claim standard deduction , it is better to choose itemized deduction in following situations :
- You had large uninsured medical and dental expenses
- You paid interest or taxes on your home
- You had large unreimbursed employee business expenses or other miscellaneous deductions
- You had large uninsured casualty or theft losses, or
- You contributed to qualified charities
While the information on this site - Internal Revenue Code Simplified-is about legal issues, it is not legal advice or legal representation. Because of the rapidly changing nature of the law and our reliance upon outside sources, we make no warranty or guarantee of the accuracy or reliability of information contained herein.
Leave a Reply