Discussion:Must they itemize?
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Discussion Forum Index --> Basic Tax Questions --> Must they itemize?
Discussion Forum Index --> Tax Questions --> Must they itemize?
| April 1, 2008 | |
| For first time these clients will itemize, because their state and local withholding (plus their charitable contributions and their DMV taxes) now exceeds the standard deduction by a few $. Itemizing will reduce their tax by about $250. However, now that they have itemized, the state refund they will receive this year, about $1600, will be taxed NEXT year, at about $400. Net loss is $150.
May we force the standard deduction to prevent this? | |
RoyDaleOne (talk|edits) said: | 1 April 2008 |
(e) ELECTION TO ITEMIZE
(1) IN GENERAL
Unless an individual makes an election under this subsection for the
taxable year, no itemized deduction shall be allowed for the taxable
year. For purposes of this subtitle, the determination of whether a
deduction is allowable under this chapter shall be made without
regard to the preceding sentence.
See Pub 501..... | |
| April 1, 2008 | |
| Interesting. You'll only pick up in income the amount of the refund that helped create a tax benefit, tho'... | |
Anytaxpayer (talk|edits) said: | April 1, 2008 |
| don't forget the added cost of itemizing, if that's the way you charge. | |
Bushmaster (talk|edits) said: | 1 April 2008 |
| Read what JR1 said. | |
Outwesttax (talk|edits) said: | 1 April 2008 |
| geez folks, don't forget that the refund is only taxed to the extent it creates a tax benefit, in other words pushes itemized deductions above the standard deduction.
In other words, if itemized deductions exceed standard by $5, then only $5 of the $1600 is taxed. (ingnoring itemized state sales tax options, etc) | |
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