Wiley Tax Preparer: A Guide to Form 1040

CHAPTER 19

Standard and Itemized Deductions

The calculation of a taxpayer's tax liability includes the subtraction from adjusted gross income of either a standard deduction or the total of various allowable expenses known as itemized deductions. Generally, taxpayers may choose either method, but they usually choose the method that provides the greater tax benefit. Taxpayers in some situations are required to itemize deductions.

The standard deduction is an inflation-adjusted amount based on filing status. Taxpayers who are at least 65 years old and/or blind can add an additional amount to the standard deduction.

Itemized deductions are allowed for various personal expenses, including medical costs, taxes, interest, charitable contributions, personal casualty and theft losses, and various miscellaneous expenses. Certain thresholds and limitations apply to some itemized deductions. Taxpayers must keep adequate records to support deductions claimed.

Itemized deductions are explained further in Chapters 20 through 26.

Standard Deduction

TIP: Taxpayers who itemize deductions are not eligible to claim any additional standard deductions based on age or blindness.

The standard deduction is a fixed dollar amount that can be deducted from adjusted gross income (AGI) to arrive at taxable income. Table 19.1 presents the standard deduction amounts for 2012.

Table 19.1 2012 Standard Deduction ...