Should I Itemize?
Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. According to the IRS, money paid for medical care, mortgage interest, taxes, contributions, casualty losses, and miscellaneous deductions can reduce your taxes. If the total amount spent on those categories is more than the standard deduction, you can usually benefit by itemizing.
The standard deduction amounts are based on your filing status and are subject to inflation adjustments each year. For 2002, they are:
Married Filing Jointly $7,850
Head of Household $6,900
Married Filing Separately $3,925
The standard deduction amount is more for taxpayers age 65 or older and for those who are blind.
Your itemized deductions may be limited if your adjusted gross income is more than $137,300, or $68,650 for those Married Filing Separately. This limit applies to all itemized deductions except medical and dental expenses, casualty and theft losses, gambling losses, and investment
When a married couple files separate returns and one spouse itemizes deductions, the other spouse must also itemize and cannot claim the standard deduction.
There are some taxpayers who 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. For additional information, see Publication 501, "Exemptions, Standard Deduction, and Filing Information."
For more details on itemized deductions, see the instructions for Schedule A, Form 1040, or Publication 17, "Your Federal Income Tax."
This daily Tax Tip has been provided by the IRS
Note: These tips are provided to help trigger ideas on ways to minimize your tax burden, not as a substitute for professional advice. There is no "one-size-fits-all" answer - each taxpayer's situation is different. You should contact your tax preparer to determine together how this may affect your unique situation.