Standard and Itemized Deductions

Throughout this Guide, we discussed a wide range of deductible expenses, in the context of the type of income to which they pertain.

For example, Sections 10 through 16 deal extensively with tax deductions relating to your small business. Section 4 covers deductible employee business expenses and moving expenses, and Section 5 covers deductions related to rental real estate, and to the home mortgage interest and real estate tax deductions for your home. Section 6 discusses deductions related to investment income.

In this section, we're going to wrap up our discussion of tax deductions by:

• first, exploring the choice between using the standard deduction and itemizing your deductions on Schedule A of Form 1040
• second, discussing in more detail the few types of itemized deductions that we haven't covered elsewhere: the deductions for medical expenses, charitable contributions, casualty deductions, taxes other than real estate, and other miscellaneous deductions
• finally, explaining how those of you in the higher income ranges may be required to cut back your itemized deductions, and suggest some ways to minimize the damage for those of you who are affected by the phaseout