Chapter 13
Claiming the Standard Deduction or Itemized Deductions
Claim the standard deduction only if it exceeds your allowable itemized deductions for mortgage interest, property taxes, medical costs, charitable donations, casualty losses, and miscellaneous deductions for job costs and investment expenses. Generally, a single person may claim a 2012 standard deduction of $5,950; a head of household, $8,700; a married couple filing jointly or a qualifying widow(er), $11,900; and a married person filing separately, $5,950. Larger standard deductions are allowed to individuals who are age 65 or older or blind, and lower standard deductions are allowed to dependents with only investment income.
Before deciding whether to itemize or claim the standard deduction, read Chapters 14 through 20 to see that you have not overlooked any itemized deductions. To itemize, you must file Form 1040 and report your deductions on Schedule A.
13.1 Claiming the Standard Deduction
13.2 Husbands and Wives Filing Separate Returns
13.3 Standard Deduction If 65 or Older or Blind
13.4 Standard Deduction for Dependents
13.5 Prepaying or Postponing Itemized Expenses
13.6 No Phaseout of Itemized Deductions
Table 13-1 Itemized Deductions and the Standard Deduction for 2012
| Item— | Explanation— | Limitations and Examples— |
| Standard deduction | The basic standard deduction is fixed by law according to your filing status and age. The standard deduction in 2012 is: $11,900 if you are married filing jointly or a qualifying widow or widower. $5,950 if you are single. $8,700 if you are a head of household. $5,950 if you are married filing separately. An additional standard deduction is allowed for being age 65 or older or blind (13.3). |
A married person filing separately may not use the standard deduction if his or her spouse itemizes deductions (13.2). The standard deduction may not be claimed by a nonresident or dual-status alien or on a return filed for a short taxable year caused by a change in accounting period. A lower standard deduction of $950 is allowed to dependents with only unearned income (13.4). |
| Itemized deductions | You should itemize deductions on Schedule A of Form 1040 if your deductions exceed the standard deduction for your filing status. Itemized deductions include charitable contributions, interest expenses, local and state taxes, medical and dental costs, casualty and theft losses, job and investment expenses, and educational costs. | For 2012, there is no overall limitation on itemized deductions based on adjusted gross income (13.7). Thus, after applying the individual limitations for each itemized deduction (such as the incomebased floors for medical, casualty, and miscellaneous deductions), compare the total of your allowable deductions to the standard deduction allowed for your filing status in 2012. For example, you are single and so may claim the standard deduction of $5,950 for 2012. However, your allowable itemized deductions are $6,034. You can claim $6,034 by itemizing deductions on Schedule A of Form 1040. |
| Charitable contributions | If you itemize, you may deduct donations to religious, charitable, educational, and other philanthropic organizations that have been approved to receive deductible contributions (14.1). | The contribution deduction is generally limited to 50% of adjusted gross income (14.17). Lower ceilings apply to most property donations and contributions to foundations. The deductible amount is included in the reduction explained above. See Chapter 14 for details on charitable contributions. |
| Interest expenses | If you itemize, you may deduct interest on qualified home mortgages, points, home equity loans, and interest on loans to carry investments. | Interest on investment loans is deductible only to the extent of net investment income (15.10). Interest on personal and consumer loans is not deductible. Interest on home mortgages is deductible if certain tests are met (15.1). Deductions for home mortgage interest and points are included in the reduction explained above. See Chapter 15 for details on interest deductions. |
| Taxes | If you itemize, you can deduct real estate taxes and state and local income taxes, or you may be able to elect to deduct general sales taxes in lieu of the income taxes (16.3). You cannot deduct real estate taxes paid in 2012 if you claim the standard deduction. |
See Chapter 16 for details on deductible taxes. |
| Medical expenses | You may deduct payments of medical expenses for yourself, your spouse, and your dependents (17.1). A checklist of deductible medical items is provided in (17.2). With the exception of insulin, drugs are deductible only if they require a prescription by a physician. | Only expenses in excess of 7.5% of adjusted gross income are deductible for 2012. See Chapter 17 for details. |
| Casualty and theft losses | You may deduct personal property losses caused by storms, fires, and other natural events and as the result of theft (18.1). | Each individual casualty loss must exceed $100 and the total of all losses other than net disaster losses during the year must exceed 10% of adjusted gross income (18.12). See Chapter 18 for casualty and theft loss details. |
| Job expenses | You may deduct unreimbursed costs of union dues, job educational courses, work clothes, entertainment, travel, and looking for a new job. | Included as miscellaneous expenses of which only the excess over 2% of adjusted gross income is deductible (19.1). The 2% floor does not apply to performing artists (12.2), handicapped employees, or job-related moving expenses (12.3). |
| Investment expenses and tax preparation costs | You may deduct investment expenses and other expenses of producing and collecting income, expenses of maintaining income-producing property, expenses of preparing your tax return or refund claims, and IRS audits. | Included as miscellaneous expenses of which only the excess over 2% of adjusted gross income is deductible (19.15). |
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