It makes sense that reducing your income would put you in a lower tax bracket, but it's hard to think of any way that reducing your income would reduce your itemized deductions. If your itemized deductions are still $3,000 more than the standard deduction, how would it be better to use the standard deduction?
The only thing I can think of that might reduce your itemized deductions is if you have a deduction for some type of charitable contributions that is limited by your AGI, but that would be very unusual.
What itemized deductions do you have? Does the amount of any of the itemized deductions change because of the unemployment exclusion?
