The IRS allows you to reduce your taxable income in one of two ways. The first way is by using a predetermined amount - the standard deduction. The second option is by claiming certain actual expenses, known as itemized deductions.
Here are four things you should know about itemizing deductions and taking the standard deduction:
As a general rule, take whichever amount is greater, the standard deduction or the total of your itemized deductions.
Some common itemized deductions are charitable contributions, mortgage interest, property taxes, employee business expenses, and medical expenses. If the total itemized deductions are more than your standard deduction, consider itemizing.
As of 2013, you can only deduct medical expenses to the extent that your total medical expenses exceed 10% of your adjusted gross income, known as the "floor." Your adjusted gross income, or AGI, is your taxable income before itemized deductions and exemptions.
If you or your spouse are at least age 65 by the end of the year, you can still deduct total medical expenses that exceed 7.5% of your adjusted gross income.
After 2016, everyone must meet the 10% floor for medical expenses before they can take a deduction.
Your total employee business expenses and certain miscellaneous deductions must meet a 2% floor before you can take a deduction.
Your standard deduction is based mostly on your filing status. If you or your spouse are age 65 or older, or if one or both of you are blind, you qualify for a higher standard deduction.
|If your filing status is:||Your 2013 standard deduction is:|
|Single or Married filing separately||$6,100|
|Married filing jointly or Qualifying widow(er) with dependent child||$12,200|
|Head of household||$8,950|
|Check the number of boxes that apply to you (or spouse if applicable)|
|If your filing status is:||Number of boxes checked:||Your 2013 standard deduction is:|
|Married filing jointly or Qualifying widow(er) with dependent child||1||$13,400|
|Married filing separately||1||$7,300|
|Head of household||1||$10,450|
You may not qualify for a full standard deduction if your parents can claim you as a dependent on their return. In that case, your standard deduction is limited to the greater of $1,000 or your earned income for the year plus $350, but not more than the regular standard deduction amount.
You also cannot take any standard deduction if one or more of the following conditions are true:
Exception: If you are a dual-status alien filing jointly with your spouse who is a U.S. citizen, you and your spouse can agree to be taxed on your worldwide income and itemize deductions.
If you itemize, you can find your itemized deductions and the total amount of itemized deductions you are allowed to take on Schedule A, Itemized Deductions.
If you use the standard deduction instead of itemizing, TaxAct does not print Schedule A with your return. Instead, TaxAct gives you the standard deduction directly on Form 1040.
July 4 — Everyone
Federal Holiday (Independence Day) Details
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If you received $20 or more in tips during June, report them to your employer Details
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