Thursday, October 2, 2008

Standard Deductions vs. Itemized Deductions

When filing your personal income taxes, you have 2 options when claiming deductions: Standard Deduction OR Itemized Deductions. First, lets define 'deductions'. Deductions are allowable subtractions from your adjusted gross income that the IRS gives before applying your tax rate and determining how much tax you will owe.

Alot of factors determine which type of deduction plan you can take*. You can only claim donation amounts if you are able to Itemize your deductions. To determine if you can Itemize, using IRS 1040 form Schedule A, you would compile your totals for the various acceptable deductions according to the Schedule A instructions. When you arrive at a Total of Itemized deductions on line 29, compare this to the Standard Deduction according to your filing status (single, married filing joint, head of household etc.). If the Total of Itemized deductions is higher than the Standard deduction amount, congratulations, you can itemize!

But for those of us who don't have enough Itemized deductions to rise above the Standard, continue to contribute and give donations of all kinds! They still benefit the recipients, you just can't take if off of your taxes.

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