topic Re: deduction in Deductions & credits

deduction

Cleveland Brent — Wed, 15 Jul 2020 18:08:17 GMT

My deductions were over $ 30,000.00. Why did i need to take standard deductions?

Re: deduction

xmasbaby0 — Wed, 15 Jul 2020 18:37:56 GMT

Are you making the common mistake of just adding up all the amounts for your itemized deductions without considering the caps and thresholds that must be met?

STANDARD DEDUCTION

Many taxpayers are surprised because their itemized deductions are not having the same effect as they did on past tax returns. The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact since the new tax laws went into effect beginning with 2018 returns.

Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund. The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you. Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.

Your standard deduction lowers your taxable income. It is not a refund.

2019 Standard Deduction Amounts

Single $12,200 (+ $1650 65 or older)

Married Filing Separate $12,200 (+ $1300 if 65 or older)

Married Filing Jointly $24,400 (+ $1300 for each spouse 65 or older)

Head of Household $18,350 (+ $1650 for 65 or older)

Look on line 9 of your 2019 Form 1040 to see your itemized/standard deduction amount

Re: deduction

JPeterson1 — Mon, 25 Jan 2021 19:45:31 GMT

If our listed expenses don't exceed the standard deduction is it even necessary to file a schedule C for a small business?

Re: deduction

DawnC — Mon, 25 Jan 2021 19:56:56 GMT

Yes. Your standard deduction has nothing to do with your business's deductions on Schedule C. You get your standard deduction in addition to your business expenses. If you have any business income, it has to be reported on a Schedule C and you will be overpaying taxes if you do not include your business expenses on the Schedule C. Only your business expenses go on the Schedule C. Any personal deductions are part of your itemized deductions and if your itemized deductions are more than the standard deduction, you will use those instead of your standard deduction. TurboTax will figure out which is the best (largest) personal deduction for you, either itemized or standard. But all taxpayers get to take one of those. As a business owner, you can also deduct your business expenses on Schedule C for even more tax savings. @JPeterson1