A taxpayer %Yin have a tax savings only if the total itemized deductions
, mortgage interest, charitable contributions.
Memo 2008-141, the Tax Court found that if the IRS prepares a substitute return because the taxpayer did not file one, then the taxpayer cannot claim itemized deductions
Nor is it subject to the 2%-of-AGI threshold for miscellaneous itemized deductions
If the itemized deductions
for which you are eligible exceed your standard deduction, it tends to be advantageous to itemize on Schedule A (Form 1040)," explained Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc.
Charitable contributions are generally fully deductible as long as your itemized deductions
exceed the standard deduction and you don't surpass statutory limits--50%, 30% or 20% of your adjusted gross income (AGI), depending on what you donate and whether the recipient is a public charity on an operating or non-operating foundation.
And any amounts you pay out toward healthcare expenses are deductible under itemized deductions
have to add up to more than the standard deduction.
Studies indicate that, by 2007, almost 95 percent of the revenue from AMT preferences and adjustments will be derived from four items that are "personal" in nature and not the product of tax planning strategies -- the personal exemption, the standard deduction, state and local taxes, and miscellaneous itemized deductions
If 1993 taxable income for each spouse is between $18,450 and $44,575 (the M/S 28% bracket), and AGI is less than $54,225, the point where itemized deductions
are being phased out on separate returns, the taxpayers find themselves in a "neutral zone" where separate returns and joint returns yield the same tax liability as shown in Table 1.
Also, the federal phaseout of exemptions and itemized deductions
for high-income taxpayers insidiously increase the marginal tax rates.
President Obama today reiterated the importance of tax policy in promoting homeownership but endorsed limiting itemized deductions
, including the mortgage interest deduction.
The error is on early versions of Schedule CA 540), California Adjustments, which is used to make adjustments to federal adjusted gross income and claim federal itemized deductions