Standard and Itemized Deductions

When it comes to deductions, you have two choices. You can take the standard deduction, which is a fixed dollar amount that you deduct from your taxable income, or you can itemize deductions. For 2007 the standard deduction is $5,350 if you're filing single, $10,700 for married filing jointly, $5,350 for married filing separately, and $7,850 for head of household.

If your actual allowable deductions total more than the standard deduction, you'll save money by itemizing. To see if you qualify, use a copy of Schedule A from Form 1040 to list the amounts of each of the deductions that apply to you, such as home mortgage interest, real-estate taxes, state income taxes, and personal-property taxes. If the total is more than the standard deduction, itemize.

So many deductions have disappeared over the years that if you have no mortgage interest or very low mortgage interest, you probably won't be able to itemize unless you have extremely large medical expenses or charitable contributions.

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  2. Personal Finance in Your 20s and 30s
  3. Minimizing Income Taxes
  4. Standard and Itemized Deductions
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