J. William Seabrooke CPA P.C.

The exclusive purpose for the information which is provided from this website is to disseminate information, and not to provide tax advice.

This is an important decision to make each year, but there are several important requirements that have to be met throughout the year if you wish to have this choice.  A major consideration is adequate “record keeping”.  IRS Publication 552 provides some excellent guidelines for this requirement:  http://www.irs.gov/publications/p552/ar02.html   Additionally, the below information should be considered: 

You cannot use the standard deduction if:

• You are married and filing a separate return, and your spouse itemizes deductions
• You are a nonresident alien or a dual-status alien during the year, or
• You are filing a tax return for a period of less than 12 months because of a change in your annual accounting method

In addition an estate or trust, common trust fund, or partnership cannot use the standard deduction. For additional information, refer to Publication 501, Exemptions, Standard Deduction, and Filing Information.

You may benefit from itemizing your deductions on Schedule A if you:

• Cannot use the standard deduction
• Had large uninsured medical and dental expenses
• Paid interest or taxes on your home
• Had large unreimbursed employee business expenses
• Had large uninsured casualty or theft losses, or
• Made large charitable contributions

 

Standard Deduction vs. Itemizing: Seven Facts to Help You Choose 

Each year, millions of taxpayers choose whether to take the standard deduction or to itemize their deductions. The following seven facts from the IRS can help you choose the method that gives you the lowest tax.

1. Qualifying expenses – Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. If the total amount you spent on qualifying medical care, mortgage interest, taxes, charitable contributions, casualty losses and miscellaneous deductions is more than your standard deduction, you can usually benefit by itemizing.

2. Standard deduction amounts -Your standard deduction is based on your filing status and is subject to inflation adjustments each year. For 2011, the amounts are:
        Single     $5,800
        Married Filing Jointly   $11,600
        Head of Household   $8,500
        Married Filing Separately  $5,800
        Qualifying Widow(er)  $11,600

3. Some taxpayers have different standard deductions – The standard deduction amount depends on your filing status, whether you are 65 or older or blind and whether another taxpayer can claim an exemption for you. If any of these apply, use the Standard Deduction Worksheet on the back of Form 1040EZ, or in the 1040A or 1040 instructions.

4. Limited itemized deductions – Your itemized deductions are no longer limited because of your adjusted gross income.

5. Married filing separately – When a married couple files separate returns and one spouse itemizes deductions, the other spouse cannot claim the standard deduction and therefore must itemize to claim their allowable deductions.

6. Some taxpayers are not eligible for the standard deduction – They include nonresident aliens, dual-status aliens and individuals who file returns for periods of less than 12 months due to a change in accounting periods.

7. Forms to use – The standard deduction can be taken on Forms 1040, 1040A or 1040EZ. To itemize your deductions, use Form 1040, U.S. Individual Income Tax Return, and Schedule A, Itemized Deductions.

These forms and instructions may be downloaded from the IRS website at www.irs.gov or ordered by calling 800-TAX-FORM (800-829-3676).
Links:

• Publication 17, Your Federal Income Tax (PDF)
• Schedule A, Itemized Deductions (PDF)