Individual Taxation 2 of 5 (2)

Question 1

Standard Deduction

Answer 1

• An amount a taxpayer may deduct from AGI in computing taxable income when deductions for certain personal expenses are not itemized
• the amount depends on the taxpayer’s filing status.

Question 2

Itemized Deductions

Answer 2

Expenses incurred by a taxpayer that may be deducted “FROM AGI” on Schedule A, instead of the standard deduction when computing taxable income.

The deductions include (COmMITT):

Charitable contributions

Other miscellaneous (e.g., gambling losses)

Medical & dental expenses (10%)

Interest

Taxes paid

Theft or casualty loss (from federally declared disasters or to the extent of personal casualty gains).

Question 3

Qualifying Widow(er) with Dependent Children Filing Status

Answer 3

To qualify, taxpayer must meet the following criteria:

• Spouse died in prior 2 years and taxpayer qualified to file a joint return in year of death.
• Taxpayer provided over 50% of cost of maintaining principal residence of dependent child.
• Taxpayer must not be remarried as of end of year.

Question 4

Head of household (HOH) Filing Status

Answer 4

To qualify, taxpayer must:

• Be unmarried, and
• Maintain a home as the principal place of residence for over 50% of the year and provide more than 50% of costs of maintaining a household for a dependent:
  
  • “Qualifying Child”
  • “Qualifying Relative,” including uncles/aunts, nephews/nieces, adult siblings or children, or certain step-relatives and in-laws. Dependent relatives further removed and unrelated persons do NOT qualify a taxpayer for HOH.
  • Exception: Dependent parents need not live with the taxpayer.