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Standard Deduction Equals Itemized Deduction?
Old 02-19-2012, 11:43 AM   #1
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Standard Deduction Equals Itemized Deduction?

As I was preparing a draft of my ladyfriend's federal income taxes, I was entering her Schedule A itemized deductions into my homemade spreadsheet. I knew all along from earlier estimates that it would be pretty close as to whether we would need to itemize her deductions versus taking the standard deduction.

But imagine my surprise when, after entering her mortgage interest, property taxes, and state income taxes into the spreadsheet the total itemized deduction came out to be $5,800.17, only 17 cents different from the SD (single person).

Looks like we can forget about her Schedule A this year (even if her itemized deductions were a few dollars higher, it might still make no difference). Form 1040EZ is pretty quick and "EZ" to do.
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Old 02-19-2012, 12:28 PM   #2
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Some states require you to have itemized on your Federal return in order to itemize on your state return. You may want to take this into consideration before you make your decision.
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Old 02-19-2012, 12:43 PM   #3
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Some states require you to have itemized on your Federal return in order to itemize on your state return. You may want to take this into consideration before you make your decision.
She is much further away from being able to itemize on her state return. Here in New York, the Standard Deduction (despite not being indexed) is still higher than the federal one, and state income taxes are not deductible on the state return (of course). So it is much tougher to itemize on a NYS return.

But your point is well taken as general advice.
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Old 02-19-2012, 07:48 PM   #4
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For future years, one may wish to bunch deductions into odd or even years, so that the standard deduction is taken one year, then itemize the next.

We do this since we paid off the mortgage and do not have mortgage interest to push us into Itemize Land.

Example: We pay prop taxes in January 2012 for 2012 and in December 2012 for 2013. We donate to a charitable trust in January 2012 and in December 2012. With doubled up prop taxes and donations, we itemize.

In the year 2013, we do not pay prop taxes and do not make deductible charitable donations, so we take the standard deduction. We do use the charitable trust to parcel out donations annually to our causes, so those charities do get money each year.

In your lady friend's situation, she may be able to move a mortgage payment (13 months in one year, 11 months in the next year) and property tax payments to make bunching worthwhile. You didn't mention charity, but that's always a possibility, too.
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Old 02-19-2012, 08:25 PM   #5
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For future years, one may wish to bunch deductions into odd or even years, so that the standard deduction is taken one year, then itemize the next.

We do this since we paid off the mortgage and do not have mortgage interest to push us into Itemize Land.

Example: We pay prop taxes in January 2012 for 2012 and in December 2012 for 2013. We donate to a charitable trust in January 2012 and in December 2012. With doubled up prop taxes and donations, we itemize.

In the year 2013, we do not pay prop taxes and do not make deductible charitable donations, so we take the standard deduction. We do use the charitable trust to parcel out donations annually to our causes, so those charities do get money each year.

In your lady friend's situation, she may be able to move a mortgage payment (13 months in one year, 11 months in the next year) and property tax payments to make bunching worthwhile. You didn't mention charity, but that's always a possibility, too.
Actually, she will already be able to do this (bunch together deductible items into one year) because the property taxes she pays for a timeshare are billed once every 2 years.

And I will be begin bunching together deductible items into one year because I will be on the border for the same thing. In my case, I will start making my estimated income tax payments in January for the previous year and December for the actual year to put them in the same tax year. This will begin in 2013.

So she will be itemizing in the even years and I will be itemizing in the odd years.
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Old 02-22-2012, 08:52 AM   #6
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Also, be aware that if she itemized and got a state tax refund that would be income the following year. If its a tie, or close, and you are getting a state tax refund, definitely take the standard deduction.
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Old 02-22-2012, 09:09 AM   #7
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Also, be aware that if she itemized and got a state tax refund that would be income the following year. If its a tie, or close, and you are getting a state tax refund, definitely take the standard deduction.
There is a worksheet in the instruction packet and in Publication 525 which can exclude part or all of a state tax refund in case the refund, after netting it out with the taxes shown on Schedule A, would have put you below the standard deduction amount for that year. I am especially mindful of this for my own taxes because I receive a state property tax refund every year and may not have to add it all back even in the upcoming years I will still be itemizing (and won't have to add it back at all in the others).

BTW my ladyfriend wil owe about $5 on her state return.
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