Generally, you must decide whether to itemize deductions or to use the
standard deduction. You should itemize deductions if your allowable itemized
deductions are more than your standard deduction. Some taxpayers must itemize
deductions because they do not qualify for the standard deduction.
Those taxpayers not eligible to use the standard deduction include nonresident
aliens, dual–status aliens, and individuals who file returns for periods
of less than 12 months. When a married couple files separate returns and one
spouse itemizes deductions, the other spouse must also itemize deductions.
For additional information, refer to Publication 501, Exemptions,
Standard Deduction, and Filing Information.
Itemized deductions are certain expenses that you can use to lower your
taxes. For 2004, the categories of itemized deductions are:
Medical and dental expenses,
State and local income taxes,
Real estate and personal property taxes,
Home mortgage and investment interest,
Charitable contributions,
Casualty and theft losses,
Job expenses, and
Miscellaneous deductions.
You may be subject to a limit on some of your itemized deductions. For
2004, this limit applies if your adjusted gross income is more than $142,700,
or $71,350 if you are married filing separately. This limit applies to all
itemized deductions except medical and dental expenses, casualty and theft
losses, gambling losses, and investment interest.
For more information on itemized deductions, refer to your Instructions for Form 1040 for Schedule A, or Publication 17, Your Federal Income
Tax.
The standard deduction varies according to your filing status and age.
The basic standard deductions for 2004 are as follows:
| Single |
$4,850 |
| Head of Household |
$7,150 |
| Married, filing a joint return |
$9,700 |
| Married, filing a separate return |
$4,850 |
| Qualifying Widow or Widower with dependent child |
$9,700 |
An additional amount will be allowed if you or your spouse became age 65
or older before January 2, 2005, or if either of you is blind. If you can
be claimed as a dependent on another person's return, your standard deduction
may be limited. For further information on the additional standard deduction
for the blind or elderly, and the limit for dependents, refer to Topic 551.
