Standard and Itemized Deductions
As you work with this chapter, obtain the following Internal Revenue Service (IRS) forms and publications to increase your understanding and to complete the chapter questions and problems:[8]
Form 1040 and Instructions
Schedule A (Form 1040)
Form 2106Form 2106Form for reporting employee business expense. Employee Business Expense
Form 4952Form 4952Form for reporting investment interest expense. Investment Interest
Form 8283Form 8283Form for reporting noncash contributions. Noncash Contributions
Overview
Once adjusted gross income (AGI) is calculated, a taxpayer will decide whether to use the standard deduction or to itemize deductions if the total of the itemized is greater. The standard deductionstandard deductionAmount reducing AGI in computing taxable income; 2008 amounts: single, $5,450; head of household, $8,000; married filing joint, $10,900. is a reduction from AGI in arriving at taxable income and it is recorded in the Tax, Credits, and Payments section on page 2 of Form 1040 or 1040A. Itemized deductions are reported and computed first on Schedule A, Form 1040, and then the total is transferred to the Tax, Credits, and Payments section. For most taxpayers, the standard deduction will be larger than itemized deductions unless the taxpayer(s) owns a home. A couple of other situations could create enough itemized deductions—high medical costs or high charitable contributions. Each section in this chapter has a fairly good corresponding chapter or section in Publication 17. The text material will emphasize or supplement Publication 17.
[8] The forms and publications are in addition to Your Federal Income Tax, Publication 17, Internal Revenue Service.
