Chapter 6: Individual Deductions

Itemized Deductions

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Deductions "for AGI" versus "from AGI

--"for AGI" (also called deductions "above the line") are subtracted directly from gross income *preferred
--"from AGI" (also called deductions "below the line" or "itemized" deductions) are subtracted directly from AGI, resulting in taxable income

Categories of "for AGI

1. Deductions directly related to business activities.
2. Deductions indirectly related to business activities.
3. Deductions subsidizing specific activities.

Business Activities

A profit motivated activity that requires a relatively high level of involvement or effort from the taxpayer to generate revenue

Trade or Business

Another name for Business Activities
a profit-motivated activity characterized by a sustained, continuous high level of individual involvement or effort

Deductions for Business Activities

Congress allows taxpayers involved in business activities to deduct expenses incurred to generate business income; because taxpayers include the revenue they receive from doing business in gross income, they should be allowed to deduct against gross incom

Investment Activities

a profit seeking activity that is intermittent or occasional in frequency including the production or collection of income or the management, conversation or maintenance of property held for the production of income. (don't require a high degree of involv

What type of deduction are business and investment activities?

Business activities:business expenses are deducted FOR AGI. The lone exception is unreimbursed employee business expenses, which are deductible as miscellaneous itemized deductions (from AGI deduction).
Investment activities: deductible as itemized deduct

Ordinary and Necessary Business Deductions

an expense that is normal or appropriate and that is helpful or conducive to the business activity

Rental ad Royalty Expenses

Taxpayers are allowed to deduct their expenses associated with generating rental or royalty income for AGI.
are reported with rental and royalty revenues on Schedule E of Form 1040.
most commonly considered to be investment activities, but like trade or b

Losses

taxpayers disposing of business assets at a loss are allowed to deduct the losses for AGI. Also, individual taxpayers selling investment (capital) assets at a loss are allowed to deduct the "capital" losses against other capital gains. If the capital loss

Flow-through Entities

Income from flow-through entities such as partnerships, LLCs, and S corporations passes through to the owners of those entities and is reported on Schedule E of the tax returns of the owners. Similarly, any expenses and losses incurred by the entity pass

Indirect Business Deductions

Taxpayers can incur expenses in activities that are not directly related to making money but that they would not have incurred if they were not involved in a business activity. Taxpayers are allowed to deduct several of these expenses that are indirectly

Examples of Indirect Business Deductions

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Moving Expenses

individuals qualify for a moving expense deduction if they move and change their principal place of work.
Two test: 1)distance test, 2) time test associated with the move *if meet both, no need to change employers
taxpayers can qualify for a moving expens

Deductible Moving Expenses Include:

limited to reasonable expenses associated with moving personal possessions and traveling to the new residence, including transportation and lodging.
19 cents a mile for driving their personal automobiles during a move.
cost of moving their personal belong

Distance Test for Moving Deductions

the distance from the taxpayer's old residence to the new place of work must be at least 50 miles more than the distance from the old residence to the old place of work.

Time Test for Moving Deductions

the taxpayer must either be employed full-time for 39 of the first 52 weeks after the move or be self-employed for 78 of the first 104 weeks after the move.

Health Insurance Deduction by Self-Employed Taxpayers

Congress allows SE taxpayers to claim personal health insurance premiums for the taxpayer, the taxpayer's spouse, the taxpayer's dependents, and taxpayer's children under age 27 (regardless of whether dependent or not) as deductions for AGI, but only to t

Self-Employment Tax Deduction

To put self-employed individuals on somewhat equal footing with other employers who are allowed to deduct the employer's share of the Social Security and Medicare taxes, self-employed taxpayers are allowed to deduct the employer portion of the self-employ

Penalty for Early Withdrawal of Savings

This provision allows a deduction for AGI for any interest income an individual forfeits to a bank as a penalty for prematurely withdrawing a certificate of deposit or similar deposit.

Deductions Subsidizing Specific Activities

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Deduction for Interest on Qualified Education Loans

QE Loans- loans whose proceeds are used to pay qualified education expenses
Up to $2,500 of interest on education loans is deductible for AGI.
The interest deduction is phased-out for taxpayers with AGI exceeding $65,000 ($130,000 married filing jointly).

Qualified Education Expenses

expenses paid for the education of the taxpayer, the taxpayer's spouse, or a taxpayer's dependent to attend a postsecondary institution of higher education.16 These expenses include tuition and fees, books and expenses required for enrollment, room and bo

Deduction for Qualified Education Expenses

subsidizes tuition payments for higher education; qualified education expenses are limited to the tuition and fees required for enrollment at a postsecondary institution of higher education.
<$65,000/$130,000 MFJ: amt up to $4,000
$65,000> or < or = 80,00

AGI limits on the interest on education loans deduction vs. educational expense deduction

1) definition of modified AGI for qualified education expenses includes the deduction for interest on education loans.
2)the interest expense on education loans is phased out gradually over a range of AGI but the deduction for qualified education expenses

Deductions from AGI: Itemized Deductions

Many are personal in nature but are allowed to subsidize desirable activities such as home ownership and charitable giving. Other itemized deductions, such as medical expenses and casualty losses, provide relief for taxpayers whose ability to pay taxes ha

List of Itemized Deductions:

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Medical Expense Deductions

Qualifying medical expenses include any payments for the care, prevention, diagnosis, or cure of injury, disease, or bodily function that are not reimbursed by health insurance or are not paid for through a "flexible spending account."18 Taxpayers may als

Common Medical Expenses

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Transportation and Travel for Medical Purposes

Taxpayers traveling for the primary purpose of receiving essential and deductible medical care may deduct the cost of lodging while away from home overnight (with certain restrictions) and transportation.23 Taxpayers using personal automobiles for medical

Hospitals and Long-Term Care Facilities

Taxpayers may deduct the cost of meals and lodging at hospitals. However, the cost of meals and lodging at other types of facilities such as nursing homes are deductible only when the principal purpose for the stay is medical care rather than convenience.

Medical Expense Deduction Limitation

The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical expenses paid during the year (no matter when the services were provided) reduced by 10 percent of the taxpayer's AGI. If a taxpayer or his or her spouse is age

Taxes

Individuals may deduct as itemized deductions payments made during the year for the following taxes:
-State, local, and foreign income taxes, including state and local taxes paid during the year through employer withholding, estimated tax payments, and ov

Interest

-individuals can deduct interest paid on acquisition indebtedness (up to $1,000,000) and home-equity indebtedness (up to $100,000) secured by a qualified residence (the taxpayer's principal residence and one other residence).
-individuals can also deduct

Acquisition Indebtedness

any debt secured by a qualified residence that is incurred in acquiring, constructing, or substantially improving the residence.

Home-equity Indebtedness

...

Two rules limit the mortgage interest deduction:

(1) Taxpayers may only deduct mortgage interest on up to $1,000,000 of acquisition indebtedness and (2) The amount of qualified home-equity indebtedness is limited to the lesser of (a) the fair market value of the qualified residence(s) in excess of the a

Deduction of Investment Interest

Limited to a taxpayer's net investment income (investment income minus investment expenses).
Any investment interest in excess of the net investment income limitation carries forward to the subsequent year.
Taxpayers are not allowed to deduct interest on

Charitable Contributions

Qualifying charitable organizations include organizations that engage in educational, religious, scientific, governmental, and other public activities.31 Political and campaign contributions are not deductible even though they arguably indirectly support

Contributions of Money

Cash contributions are deductible in the year paid, including donations of cash or by check, electronic funds transfers, credit card charges, and payroll deductions.
Taxpayers are also considered as making monetary contributions for the cost of transporta

Contributions of Property Other Than Money

When a taxpayer donates property to charity, the amount the taxpayer is allowed to deduct depends on whether the property is capital gain property or ordinary income property

Capital Gain Property

any asset that would have generated a long-term capital gain if the taxpayer had sold the property for its fair market value
taxpayers are allowed to deduct the fair market value of capital gain property on the date of the donation.
To qualify as long-ter

Ordinary Income Property

property that if sold would generate income taxed at ordinary rates (consists of all assets other than capital gain property)
Taxpayers contributing ordinary income property can only deduct the lesser of (1) the property's fair market value or (2) the pro

Charitable Contribution Deduction Limitations

The amount for the year is limited to a ceiling or maximum deduction.
The ceiling depends upon the type of property the taxpayer donates and the nature of the charity receiving the donation; donations to public charities (charities that are publicly suppo

Casualty and Theft Losses on Personal-Use Assets

A casualty loss is a loss arising from a sudden, unexpected, or unusual event such as a "fire, storm, or shipwreck" or loss from theft.
is defined as a loss arising from a sudden, unexpected, or unusual event such as a "fire, storm, or shipwreck" or loss

Tax Loss from Casualties

The amount of the tax loss from any specific casualty event (including theft) is the lesser of (1) the decline in value of the property caused by the casualty or (2) the taxpayer's tax basis in the damaged or stolen asset. The loss is reduced by any reimb

Casualty Loss Deduction Floor Limitations

Casualty losses must exceed two separate floor limitations to qualify as itemized deductions. The first floor is $100 for each casualty event during the year. This floor eliminates deductions for small losses. The second floor limitation is 10 percent of

Miscellaneous Itemized Deductions Subject to AGI Floor

deductions representing the sum of certain itemized deductions, such as unreimbursed employee business expenses, investment expenses, and tax preparation fees, that are subject to a special floor limitation
include employee business expenses, investment e

Employee Business Expenses

employee business expenses are deductible as miscellaneous itemized deductions. Expenses that qualify include those that are appropriate and helpful for the employee's work such as the cost of professional dues, uniforms (unless suitable as normal attire)

Travel and transportation

The cost of travel is deductible if the primary purpose of the trip is business. However, the cost of commuting�traveling from a residence to the place of business�is personal and never deductible.41 When employees drive their personal automobiles for bus

Employee expense reimbursements.

As a general rule, employees include reimbursements in gross income and deduct employee business expenses as miscellaneous itemized deductions. However, if an employee is required to submit documentation supporting expenses to receive reimbursement and th

Accountable Plan

Under an accountable plan (which is the most common method for reimbursement) employees exclude expense reimbursements from gross income and do not deduct the reimbursed expenses.

Investment Expenses

These expenses are classified as miscellaneous itemized deductions and include expenditures necessary for the production or collection of income, or for the management, conservation, or maintenance of property held for the production of income.

Common investment expenses include:

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Tax Preparation Fees

Ordinary and necessary expenses incurred in connection with determining tax obligations imposed by federal, state, municipal, or foreign authorities are also deductible as miscellaneous itemized deductions subject to the 2 percent of AGI floor.44 While th

Hobby Losses

Hobby expenses are deductible only to the extent of the revenue generated by the hobby.
Sometimes referred to as the hobby loss limitation, this limit is less taxpayer-friendly for a hobby than the limits on business expenses. Thus, it's important to dete

Limitation on Miscellaneous Itemized Deductions (2 percent of AGI Floor)

To apply the 2 percent floor limit and determine the miscellaneous itemized deduction, the sum of all deductions subject to the 2 percent floor limitation is reduced by 2 percent of AGI. If the 2 percent floor equals or exceeds the sum of miscellaneous it

Miscellaneous Itemized Deductions Not Subject to AGI Floor

unlike other miscellaneous itemized deductions, gambling losses are not subject to the 2 percent of AGI floor. Casualty and theft losses on property held for investment and the unrecovered cost of a life annuity (the taxpayer died before recovering the fu

Phase-Out of Itemized Deductions

In addition to limits on specific deductions, the amount of a taxpayer's total itemized deductions other than medical expenses, casualty losses, investment interest expense, and gambling losses is subject to a phase-out. That is, when AGI exceeds a certai

Standard Deduction

is a flat amount that most individuals can elect to deduct instead of deducting their itemized deductions (if any).
Taxpayers generally deduct the greater of their standard deduction or their itemized deductions.
-varies according to the taxpayer's filing

Purpose of Standard Deduction (gov't standpoint)

1) to help taxpayers with lower income, it automatically provides a minimum amount of income that is not subject to taxation.
2) it eliminates the need for the IRS to verify and audit itemized deductions for those taxpayers who chose to deduct the standar

Purpose of Standard Deduction (taxpayer standpoint)

the standard deduction allows them to avoid taxation on a portion of their income, and for those not planning to itemize deductions, it eliminates the need to substantiate and collect information about them.

Bunching Itemized Deductions

The basic timing strategy consists of shifting itemized deductions into one year such that the amount of itemized deductions exceeds the standard deduction for the year, and then deducting the standard deduction in the next year (or vice versa).
(Some tax

Itemized Deductions

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Deductions "for AGI" versus "from AGI

--"for AGI" (also called deductions "above the line") are subtracted directly from gross income *preferred
--"from AGI" (also called deductions "below the line" or "itemized" deductions) are subtracted directly from AGI, resulting in taxable income

Categories of "for AGI

1. Deductions directly related to business activities.
2. Deductions indirectly related to business activities.
3. Deductions subsidizing specific activities.

Business Activities

A profit motivated activity that requires a relatively high level of involvement or effort from the taxpayer to generate revenue

Trade or Business

Another name for Business Activities
a profit-motivated activity characterized by a sustained, continuous high level of individual involvement or effort

Deductions for Business Activities

Congress allows taxpayers involved in business activities to deduct expenses incurred to generate business income; because taxpayers include the revenue they receive from doing business in gross income, they should be allowed to deduct against gross incom

Investment Activities

a profit seeking activity that is intermittent or occasional in frequency including the production or collection of income or the management, conversation or maintenance of property held for the production of income. (don't require a high degree of involv

What type of deduction are business and investment activities?

Business activities:business expenses are deducted FOR AGI. The lone exception is unreimbursed employee business expenses, which are deductible as miscellaneous itemized deductions (from AGI deduction).
Investment activities: deductible as itemized deduct

Ordinary and Necessary Business Deductions

an expense that is normal or appropriate and that is helpful or conducive to the business activity

Rental ad Royalty Expenses

Taxpayers are allowed to deduct their expenses associated with generating rental or royalty income for AGI.
are reported with rental and royalty revenues on Schedule E of Form 1040.
most commonly considered to be investment activities, but like trade or b

Losses

taxpayers disposing of business assets at a loss are allowed to deduct the losses for AGI. Also, individual taxpayers selling investment (capital) assets at a loss are allowed to deduct the "capital" losses against other capital gains. If the capital loss

Flow-through Entities

Income from flow-through entities such as partnerships, LLCs, and S corporations passes through to the owners of those entities and is reported on Schedule E of the tax returns of the owners. Similarly, any expenses and losses incurred by the entity pass

Indirect Business Deductions

Taxpayers can incur expenses in activities that are not directly related to making money but that they would not have incurred if they were not involved in a business activity. Taxpayers are allowed to deduct several of these expenses that are indirectly

Examples of Indirect Business Deductions

#NAME?

Moving Expenses

individuals qualify for a moving expense deduction if they move and change their principal place of work.
Two test: 1)distance test, 2) time test associated with the move *if meet both, no need to change employers
taxpayers can qualify for a moving expens

Deductible Moving Expenses Include:

limited to reasonable expenses associated with moving personal possessions and traveling to the new residence, including transportation and lodging.
19 cents a mile for driving their personal automobiles during a move.
cost of moving their personal belong

Distance Test for Moving Deductions

the distance from the taxpayer's old residence to the new place of work must be at least 50 miles more than the distance from the old residence to the old place of work.

Time Test for Moving Deductions

the taxpayer must either be employed full-time for 39 of the first 52 weeks after the move or be self-employed for 78 of the first 104 weeks after the move.

Health Insurance Deduction by Self-Employed Taxpayers

Congress allows SE taxpayers to claim personal health insurance premiums for the taxpayer, the taxpayer's spouse, the taxpayer's dependents, and taxpayer's children under age 27 (regardless of whether dependent or not) as deductions for AGI, but only to t

Self-Employment Tax Deduction

To put self-employed individuals on somewhat equal footing with other employers who are allowed to deduct the employer's share of the Social Security and Medicare taxes, self-employed taxpayers are allowed to deduct the employer portion of the self-employ

Penalty for Early Withdrawal of Savings

This provision allows a deduction for AGI for any interest income an individual forfeits to a bank as a penalty for prematurely withdrawing a certificate of deposit or similar deposit.

Deductions Subsidizing Specific Activities

#NAME?

Deduction for Interest on Qualified Education Loans

QE Loans- loans whose proceeds are used to pay qualified education expenses
Up to $2,500 of interest on education loans is deductible for AGI.
The interest deduction is phased-out for taxpayers with AGI exceeding $65,000 ($130,000 married filing jointly).

Qualified Education Expenses

expenses paid for the education of the taxpayer, the taxpayer's spouse, or a taxpayer's dependent to attend a postsecondary institution of higher education.16 These expenses include tuition and fees, books and expenses required for enrollment, room and bo

Deduction for Qualified Education Expenses

subsidizes tuition payments for higher education; qualified education expenses are limited to the tuition and fees required for enrollment at a postsecondary institution of higher education.
<$65,000/$130,000 MFJ: amt up to $4,000
$65,000> or < or = 80,00

AGI limits on the interest on education loans deduction vs. educational expense deduction

1) definition of modified AGI for qualified education expenses includes the deduction for interest on education loans.
2)the interest expense on education loans is phased out gradually over a range of AGI but the deduction for qualified education expenses

Deductions from AGI: Itemized Deductions

Many are personal in nature but are allowed to subsidize desirable activities such as home ownership and charitable giving. Other itemized deductions, such as medical expenses and casualty losses, provide relief for taxpayers whose ability to pay taxes ha

List of Itemized Deductions:

#NAME?

Medical Expense Deductions

Qualifying medical expenses include any payments for the care, prevention, diagnosis, or cure of injury, disease, or bodily function that are not reimbursed by health insurance or are not paid for through a "flexible spending account."18 Taxpayers may als

Common Medical Expenses

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Transportation and Travel for Medical Purposes

Taxpayers traveling for the primary purpose of receiving essential and deductible medical care may deduct the cost of lodging while away from home overnight (with certain restrictions) and transportation.23 Taxpayers using personal automobiles for medical

Hospitals and Long-Term Care Facilities

Taxpayers may deduct the cost of meals and lodging at hospitals. However, the cost of meals and lodging at other types of facilities such as nursing homes are deductible only when the principal purpose for the stay is medical care rather than convenience.

Medical Expense Deduction Limitation

The deduction for medical expenses is limited to the amount of unreimbursed qualifying medical expenses paid during the year (no matter when the services were provided) reduced by 10 percent of the taxpayer's AGI. If a taxpayer or his or her spouse is age

Taxes

Individuals may deduct as itemized deductions payments made during the year for the following taxes:
-State, local, and foreign income taxes, including state and local taxes paid during the year through employer withholding, estimated tax payments, and ov

Interest

-individuals can deduct interest paid on acquisition indebtedness (up to $1,000,000) and home-equity indebtedness (up to $100,000) secured by a qualified residence (the taxpayer's principal residence and one other residence).
-individuals can also deduct

Acquisition Indebtedness

any debt secured by a qualified residence that is incurred in acquiring, constructing, or substantially improving the residence.

Home-equity Indebtedness

...

Two rules limit the mortgage interest deduction:

(1) Taxpayers may only deduct mortgage interest on up to $1,000,000 of acquisition indebtedness and (2) The amount of qualified home-equity indebtedness is limited to the lesser of (a) the fair market value of the qualified residence(s) in excess of the a

Deduction of Investment Interest

Limited to a taxpayer's net investment income (investment income minus investment expenses).
Any investment interest in excess of the net investment income limitation carries forward to the subsequent year.
Taxpayers are not allowed to deduct interest on

Charitable Contributions

Qualifying charitable organizations include organizations that engage in educational, religious, scientific, governmental, and other public activities.31 Political and campaign contributions are not deductible even though they arguably indirectly support

Contributions of Money

Cash contributions are deductible in the year paid, including donations of cash or by check, electronic funds transfers, credit card charges, and payroll deductions.
Taxpayers are also considered as making monetary contributions for the cost of transporta

Contributions of Property Other Than Money

When a taxpayer donates property to charity, the amount the taxpayer is allowed to deduct depends on whether the property is capital gain property or ordinary income property

Capital Gain Property

any asset that would have generated a long-term capital gain if the taxpayer had sold the property for its fair market value
taxpayers are allowed to deduct the fair market value of capital gain property on the date of the donation.
To qualify as long-ter

Ordinary Income Property

property that if sold would generate income taxed at ordinary rates (consists of all assets other than capital gain property)
Taxpayers contributing ordinary income property can only deduct the lesser of (1) the property's fair market value or (2) the pro

Charitable Contribution Deduction Limitations

The amount for the year is limited to a ceiling or maximum deduction.
The ceiling depends upon the type of property the taxpayer donates and the nature of the charity receiving the donation; donations to public charities (charities that are publicly suppo

Casualty and Theft Losses on Personal-Use Assets

A casualty loss is a loss arising from a sudden, unexpected, or unusual event such as a "fire, storm, or shipwreck" or loss from theft.
is defined as a loss arising from a sudden, unexpected, or unusual event such as a "fire, storm, or shipwreck" or loss

Tax Loss from Casualties

The amount of the tax loss from any specific casualty event (including theft) is the lesser of (1) the decline in value of the property caused by the casualty or (2) the taxpayer's tax basis in the damaged or stolen asset. The loss is reduced by any reimb

Casualty Loss Deduction Floor Limitations

Casualty losses must exceed two separate floor limitations to qualify as itemized deductions. The first floor is $100 for each casualty event during the year. This floor eliminates deductions for small losses. The second floor limitation is 10 percent of

Miscellaneous Itemized Deductions Subject to AGI Floor

deductions representing the sum of certain itemized deductions, such as unreimbursed employee business expenses, investment expenses, and tax preparation fees, that are subject to a special floor limitation
include employee business expenses, investment e

Employee Business Expenses

employee business expenses are deductible as miscellaneous itemized deductions. Expenses that qualify include those that are appropriate and helpful for the employee's work such as the cost of professional dues, uniforms (unless suitable as normal attire)

Travel and transportation

The cost of travel is deductible if the primary purpose of the trip is business. However, the cost of commuting�traveling from a residence to the place of business�is personal and never deductible.41 When employees drive their personal automobiles for bus

Employee expense reimbursements.

As a general rule, employees include reimbursements in gross income and deduct employee business expenses as miscellaneous itemized deductions. However, if an employee is required to submit documentation supporting expenses to receive reimbursement and th

Accountable Plan

Under an accountable plan (which is the most common method for reimbursement) employees exclude expense reimbursements from gross income and do not deduct the reimbursed expenses.

Investment Expenses

These expenses are classified as miscellaneous itemized deductions and include expenditures necessary for the production or collection of income, or for the management, conservation, or maintenance of property held for the production of income.

Common investment expenses include:

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Tax Preparation Fees

Ordinary and necessary expenses incurred in connection with determining tax obligations imposed by federal, state, municipal, or foreign authorities are also deductible as miscellaneous itemized deductions subject to the 2 percent of AGI floor.44 While th

Hobby Losses

Hobby expenses are deductible only to the extent of the revenue generated by the hobby.
Sometimes referred to as the hobby loss limitation, this limit is less taxpayer-friendly for a hobby than the limits on business expenses. Thus, it's important to dete

Limitation on Miscellaneous Itemized Deductions (2 percent of AGI Floor)

To apply the 2 percent floor limit and determine the miscellaneous itemized deduction, the sum of all deductions subject to the 2 percent floor limitation is reduced by 2 percent of AGI. If the 2 percent floor equals or exceeds the sum of miscellaneous it

Miscellaneous Itemized Deductions Not Subject to AGI Floor

unlike other miscellaneous itemized deductions, gambling losses are not subject to the 2 percent of AGI floor. Casualty and theft losses on property held for investment and the unrecovered cost of a life annuity (the taxpayer died before recovering the fu

Phase-Out of Itemized Deductions

In addition to limits on specific deductions, the amount of a taxpayer's total itemized deductions other than medical expenses, casualty losses, investment interest expense, and gambling losses is subject to a phase-out. That is, when AGI exceeds a certai

Standard Deduction

is a flat amount that most individuals can elect to deduct instead of deducting their itemized deductions (if any).
Taxpayers generally deduct the greater of their standard deduction or their itemized deductions.
-varies according to the taxpayer's filing

Purpose of Standard Deduction (gov't standpoint)

1) to help taxpayers with lower income, it automatically provides a minimum amount of income that is not subject to taxation.
2) it eliminates the need for the IRS to verify and audit itemized deductions for those taxpayers who chose to deduct the standar

Purpose of Standard Deduction (taxpayer standpoint)

the standard deduction allows them to avoid taxation on a portion of their income, and for those not planning to itemize deductions, it eliminates the need to substantiate and collect information about them.

Bunching Itemized Deductions

The basic timing strategy consists of shifting itemized deductions into one year such that the amount of itemized deductions exceeds the standard deduction for the year, and then deducting the standard deduction in the next year (or vice versa).
(Some tax