Explain the use of the standard deduction in computing taxable income. In choosi

Question

Explain the use of the standard deduction in computing taxable income. In choosing between the standard deduction and itemizing deductions from AGI, what effect, if any, does each of the following variables have?

The age of the taxpayer(s).

The health (i.e., physical condition) of the taxpayer(s).

Whether the taxpayer(s) rent or own their personal residence.

Taxpayer's filing status (e.g., single; married, filing jointly).

Whether married taxpayers decide to file separate returns.

The taxpayer's uninsured personal residence that recently was destroyed by fire.

The number of personal and dependency exemptions the taxpayer(s) can claim.

Explanation / Answer

All the amounts are according to year ending as on 2107

Standard deduction is fixed dollar amount that reduces the the income you are taxed on. Under Standard Deduction it decrease the income by one fixed amount and the amount of deduction will be on your status of fillinf the rerurn the standard deduction increase according to if you are blind or you are 65 of age or older. If you claim standard deduction it kets you avoid keeping record and recripts of your expenses if you get audited by the IRS.

The effects of different variables on the standard deduction or itemizing deduction

1. The health of the tax payer will have no effects on standard deduction but under itemizing your deduction you can claim for the deduction if you have large out of pocket medical expenses because of your health.

2.Again under standard deduction there will be any increase in the deductions but under itemizing deduction you can claim the rent paid and mortgage intrest or any real estate taxes paid for your home for deductions.

3.One fo the most imporatnt for deduction for standard deduction is the filling ststus because different standard deduction is allowed for different status of filling like for married and file jointly you get deduction of $12700 (according to 2017 figures) and so on, Under intemizing deduction if you cross ceratin AIG limit then you can get your some of the itemized amount to be liited example of a AIG for married and fillled jointly is $313,800 (accordint to 2017 figures).

4. Under standard deduction increases if the person filling the return is of 65 years of age or more but under itemizing deduction there is no such increase in the deduction according to your age unless you have incurred expenses there is no deduction.

5.under standard deduction if you filled separate return then each of you get a standard deduction of $6350 (according to 2017 figyres) and under itemizing deduction you get a sepsate AGI limit for each of the person that will limit there deduction for married filled separately is $156,900.

6.under standard deduction there is not deduction for your house uninsured destroyed by fire but underf itemizing deduction you can claim deduction for that.

7. Under standard deduction there is o deduction for personal and dependencty deuctions but ubder itemizing deuction you can claim that for deduction.

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