Because tax rates, deductions, and phaseouts are constantly changing, timing of income and expenses is critical. For most taxpayers, the general rule is to defer income and accelerate deductions.
You are allowed to take the standard deduction (see chart below) or itemize your deductions on your tax return, whichever benefits you the most. If you itemize, keep complete and accurate records that reflect every dollar going toward nonbusiness state income tax, property taxes, interest expenses, medical expenses, and charitable contributions. Bear in mind that numerous deductions may increase your AMT liability, so consult with us throughout the year to monitor your income and plan your deductions.
Some itemized deductions, such as medical expenses, unreimbursed employee business expenses, and miscellaneous expenses, are subject to "floor" amounts. Only amounts that exceed the given floor can be deducted.
|Try "bunching" your expenses to make sure you exceed the deduction "floor." Bunching two year's worth of expenses into one year enables you to increase your total deductions over the two-year period and avoid losing the tax benefit from your deductions.|
|Married, filing jointly||$12,700|
|Head of household||$9,350|
|Married, filing separately||$6,350|
|Additional deduction for blind or elderly:|
|Single or head of household||$1,550|
The American Taxpayer Relief Act re-introduced the Pease limitation on itemized deductions for certain high-income earners. The applicable threshold amounts are $313,800 for married couples; $287,650 for heads of households; and $261,500 for single filers.