What does it mean Standard Deduction?

Question

Me and my husband , we're trying to do itemized deductions through Turbo Tax . We have few medical bills, mortgage taxes, etc. that add up to(around) $ 10,000. Our joint income is around $ 60,000. Should we stick with itemized or standard deduction?

Answer 1

A married couple filing jointly gets a standard deduction of $10,300 for 2006. If you have itemized deductions greater than that, go ahead and itemize. If your itemized deductions are less than the standard deduction, just take the standard deduction.

Some deductions are limited by your Adjusted Gross Income. For example, medical expenses are limited to 7.5% of your AGI so you must have more than $4,500 with a $60k income to make it worthwhile to claim them. Others are limited to 2% of AGI, so those would have to exceed $1,200 to have any benefit.

The best way to decide is to fill out Schedule A and calculate your itemized deductions. If it's more than $10,300, file the Schedule A and take the itemized deductions. If it's less than $10,300, toss the Schedule A and take the standard deduction.

Answer 2

What Does Standard Deduction Mean

Answer 3

If you are filing a joint return, your standard deduction, the amount that you can take without listing or proving anything, is $10,300. You'd only itemize if your allowable deductions add up to more than that. You have a choice - the standard deduction, or itemizing.

Medical bills only count for itemizing when they're over 7.5% of your income, and you can only take the part that's over that, so most people can't take medical bills.

Answer 4

Unless you have medical bills that exceed 7.5% of your adjusted gross income they really wouldnt help too too much. You can definately use the following on schedule A your mortgage interest, property taxes, state & local on Line 5, and you can even put in some light charity dollars. If all of that adds up to more then the standard deduction then use the greater amount if its just the two of you and your not blind or disabled your standard deduction should be $6,600 this year. It sounds like you should itemize rather then use the standard deduction.
Keep in mind most people in America DO NOT itemize because they dont have enough deductions to do so. Lucky you.

Answer 5

You can either itemize your deductions, or take the standard deduction. If you take the standard deduction, you don't have the option of claiming deductions like medical expenses, mortgage interest, un-reimbursed work expenses, etc. Its either/or, unfortunately. Add up all your itemized deductions and see whether they add up to be more than the standard. If they do, itemize. If not, take the standard deduction.

Answer 6

The IRS gives us 2 choices to reduce our taxable income.
Choice 1: Standard Deduction, which is basically an arbitrary amount the IRS will just allow you to deduct from your income to lower your taxable income.
Choice 2: Itemized Deductions. Basically, if you can give the IRS a list of deductions that add up to more than your standard deduction, the IRS will let you reduce your income by that larger amount which is your list of Itemized deductions.

Medical Expenses and some Miscellaneous expenses are limited in what you can deduct - you have to spend over 7.5% for Medical or 2% for Miscellaneous of your income before anything is deductable.

Since you are doing Turbo Tax I have faith in the calculations. Although your itemized deductions are close to your standard deduction, it appears that your Standard Deduction is higher and gives you the best reduction.

You should always choose whichever gives you the highest deduction.

Answer 7

RE:
What does it mean Standard Deduction?
Me and my husband , we're trying to do itemized deductions through Turbo Tax . We have few medical bills, mortgage taxes, etc. that add up to(around) $ 10,000. Our joint income is around $ 60,000. Should we stick with itemized or standard deduction?

Answer 8

If you have turbo tax, just try it both ways, and compare.