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Standard Deduction Amounts Increased for 2009 Tax Returns

One of the first decisions taxpayers must make when preparing their returns can also be among the most challenging. Should they itemize or simply take the standard deduction? With less than a week to go to the April 15 tax filing deadline, Jackson Hewitt Tax Service® highlights the key issues to weigh to determine which approach may offer the better outcome.

“If the itemized deductions for which you are eligible exceed your standard deduction, it tends to be advantageous to itemize on Schedule A (Form 1040),” explained Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc. “Taxpayers with certain expenses for 2009, such as charitable donations, unreimbursed business expenses or mortgage interest, just to name a few, will often find themselves in a more favorable tax position by itemizing. But even those who don’t itemize will benefit from the increased standard deduction available for the 2009 tax year.”

When To Itemize
Itemizing deductions on a 2009 tax return may be beneficial if any of the considerations below are applicable to an individual’s tax situation:
You do not qualify for the standard deduction, or the amount you can claim is limited
You had large uninsured medical and dental expenses during the year
You paid interest and taxes on your home
You had large unreimbursed employee business expenses or other miscellaneous deductions
You had large casualty or theft losses
You made large contributions to qualified charities

There are certain items that can increase the standard deduction, including up to $500 ($1,000 if filing jointly) in real estate taxes paid, sales and excise taxes paid on a new vehicle, and any net loss from a federally declared disaster. In addition, if you are 65 or older or disabled, you may qualify for a higher standard deduction amount.
Taxpayers not eligible to use the standard deduction include married filing separate taxpayers if the spouse itemized, nonresident aliens, dual-status aliens and certain individuals who file returns for periods of less than 12 months.

Source Jackson Hewitt