Teachers still get the $200 federal above-the-line deduction
. Alternatively, teacher might consider writing off contributions of supplies to schools as a charitable donation.
This does not mean, however, that only those deductions
are properly allocable to U.S.-source gross income.
If you're in a 31% bracket, for example, $100 worth of deductions
saves you $31.
Taxpayers who use the standard deduction
can use the provision to eliminate an RMD from taxable income and effectively take a charitable deduction
, plus the standard deduction
The act creates a special tax deduction
for individuals who provide rent-free housing in their principal residence to dislocated persons for at least 60 consecutive days.
Example: Paul and Diane Brown have always itemized deductions
on Schedule A, largely due to the amounts they pay in state income tax and local property tax.
Compare approaches: Tax preparation software makes it easy to determine optimal filing approaches (e.g., taking the standard deduction
are subject to the 2% of AGI floor and the 3% overall limitation on itemized deductions
Old and Existing Law: A donor claiming a charitable donation deduction
must maintain reliable written records regarding the donation--regardless of the donation's value or amount.
A taxpayer generally must allocate and apportion these deductions
using the section 861 method.
"One thing we plan to do to avoid the AMT is to pay our state and local taxes in January 2004, which will reduce our itemized deductions
," explains Thomas Gordon.
In 2001, when CRF last performed its customer deduction
analysis, almost 65 percent of respondents indicated that they allow (credit or write-off) between 71 and 100 percent of their deductions
after investigation, with an amazing 10 percent allowing over 95 percent of the deductions