2010 may be the year for the standard deduction
Some tax breaks that expire after this year are available even to those who don't itemize.
Every year you have to make a decision -- itemize your deductions or take the standard deduction.
The answer was normally simple. Elect the one that gives you the biggest deduction.
But, this is the year for hybrids, and that now applies to the standard deduction as well. Instead of a simple flat number, the new supercharged 2009 standard deduction is a mixture that includes expenses only allowed in the past if you itemized.
We even have a new form, Schedule L, which should be filed if you elect the standard deduction. Get it from www.irs.gov.
The basic standard deduction is simple. Deduct $5,700 if you’re single or married filing separately, $11,400 on a joint return, or $8,350 if you qualify as head of household.
Now, add to that the “bonus” deductions.
Up to $500 ($1,000 on a joint return) in real estate taxes (foreign real estate taxes don’t count) that you paid. That brings your single standard deduction up to $6,300 ($12,400 on a joint return).
If you have a big mortgage, you’re probably still itemizing. But, if you paid off your mortgage and lost the interest deduction, put a big smile on your face. A joint filer in the 25% bracket just got a $250 additional reduction in taxes, or a bigger refund.
And, you get this bonus deduction regardless of your income.
We’re not done yet.
Did you buy a new car last year?
If so, the sales tax on the first $49,500 is also added to your standard deduction. With a 7% levy, that’s an additional $3,465 deduction. In the 25% bracket, that puts another $866 in your pocket.
This addition phases out as your income exceeds $125,000 ($250,000 on a joint return).
Unless Congress votes to extend these bonus deductions, they expired at the end of 2009. But, if you qualify, don’t fail to take what the law allows. After all, it really was always your money.
|Tags:||1040federal taxJeff Schnepperreal estatetax breaktax deductiontax formstax preparationtax returntax write offstaxesTips|
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