Should I even bother to make these deductions?

Question

My gtoss income for FY 2006 will be about $30,000. I'm single, have no dependents, am head of household. I estimate that I have about $500 worth of out-of-pocket expenses from this year which will are deductible.

Should I even bother to make these deductions or will it not be worth it (as far as my refund)?

My tax preparer charges a large additional fee for filling out the form required for deductions being claimed...

Answer 1

First of all, if you don't have any dependents, you can't file as head of household. The fact that you support a household with yourself in it doesn't count - h of h is only for people with dependents. You'd file as single. If your tax preparer is doing your return as head of household when you don't have any dependents, you should change preparers - and you'll be hearing from the IRS about it at some point, asking for more money.

You will get a standard deduction of $5150. Unless your deductible expenses exceed that, you're ahead to take the standard deduction which gives you that much without any explanation or proof - you'd only itemize if you had more than $5150 in allowable deductions.

Answer 2

To answer your question, no. $500 is less than the standard deduction you can claim on your federal return so it wouldn't be worth it. I don't believe you are able to claim head of household on your return unless you provide more than 50% support to an eligible dependant. You would simply file as single status.

You don't need to pay a tax preparer if you only have W-2's from a few jobs, no taxable investments (IRA earnings don't count as income until you make withdrawals), and have no other special needs. You may be able to file a 1040EZ which takes less than 15 minutes.

Below is an excerpt from IRS Pub 501-

Head of Household
You may be able to file as head of household if you meet all the following requirements.

You are unmarried or “considered unmarried” on the last day of the year.

You paid more than half the cost of keeping up a home for the year.

A “qualifying person” lived with you in the home for more than half the year (except for temporary absences, such as school). However, if the “qualifying person” is your dependent parent, he or she does not have to live with you. See Special rule for parent, later, under Qualifying Person.

Answer 3

Why do you have a tax preparer? Your taxes sound pretty straightforward to me. Why don't you check out the forms online and give it a try? You save yourself a lot of money. I have always done our taxes, even when we had our own small business. It can't be that hard...I'm not that smart!

Anyhoo, back to your question, I believe that it's either standard deduction OR itemized. What you are describing are probably only available as itemized deductions, which is not the same as tax credits, which come directly off of your tax bill.

Unless you have over $5,150 in deductions to itemize, it will not be in your best interest to do so.

Answer 4

You only need to itemize when your deductions add up to more then the standard deduction. I think the standard deduction is like $2500. So you wouldn't be doing yourself any good by itemizing.

If you go to the IRS website, there are places like Turbo-tax that will do your taxes via computer program for free if you make less then a certain amount of money. It's really, really, really easy and it's free. It sounds like you would have a really easy tax return. Don't give part of your refund away!

Answer 5

your call