Publication 501 - Exemptions, Standard Deduction, And Filing Information

of 2001. Larry and Donna use Table 8. Their

on line 3. On line 5 she enters $3,150, the larger

consent to assessment for any additional tax

standard deduction is $8,500.

either one may owe as a result of the change.

of lines 3 and 4. Since she is single, Amy enters

You and your spouse can use the method

$4,550 on line 6. She enters $3,150 on line 7a.

Example 3. Bill and Terry are filing a joint

that gives you the lower total tax, even though

This is the smaller of the amounts on lines 5 and

return for 2001. Both are over age 65. Neither is

one of you may pay more tax than you would

6. Because she checked one box in the top part

blind. If they do not itemize deductions, they use

have paid by using the other method. You both

of the worksheet, she enters $1,100 on line 7b.

Table 8. Their standard deduction is $9,400.

must use the same method of claiming deduc-

She then adds the amounts on lines 7a and 7b

tions. If one itemizes deductions, the other

and enters her standard deduction of $4,250 on

Standard Deduction

should itemize because he or she will not qualify

line 7c.

for the standard deduction (see Persons not

for Dependents

Who Should Itemize

eligible for the standard deduction, earlier).

The standard deduction for an individual for

You should itemize deductions if your total de-

whom an exemption can be claimed on another

ductions are more than the standard deduction

person’s tax return is generally limited to the

How To Get Tax Help

amount. Also, you should itemize if you do not

greater of:

qualify for the standard deduction, as discussed

1) $750, or

You can get help with unresolved tax issues,

earlier under Persons not eligible for the stan-

order free publications and forms, ask tax ques-

dard deduction.

2) The individual’s earned income for the

tions, and get more information from the IRS in

You should first figure your itemized deduc-

year plus $250 (but not more than the reg-

several ways. By selecting the method that is

tions and compare that amount to your standard

ular standard deduction amount, generally

best for you, you will have quick and easy ac-

deduction to make sure you are using the

$4,550).

cess to tax help.

method that gives you the greater benefit.

However, if the individual is 65 or older or blind,

Contacting your Taxpayer Advocate. If you

You may be subject to a limit on some

the standard deduction may be higher.

have attempted to deal with an IRS problem

of your itemized deductions if your ad-

If an exemption for you can be claimed on

unsuccessfully, you should contact your Tax-

justed gross income (AGI) is more than

CAUTION

someone else’s return, use Table 9 to determine

payer Advocate.

$132,950 ($66,475 if you are married filing sep-

your standard deduction.

The Taxpayer Advocate represents your in-

arately). See the instructions for Schedule A

Earned income defined. Earned income is

terests and concerns within the IRS by protect-

(Form 1040), line 28, for more information on

salaries, wages, tips, professional fees and

ing your rights and resolving problems that have

figuring the correct amount of your itemized de-

other amounts received as pay for work you

not been fixed through normal channels. While

ductions.

actually perform.

Taxpayer Advocates cannot change the tax law

or make a technical tax decision, they can clear

For purposes of the standard deduction,

When to itemize. You may benefit from

up problems that resulted from previous con-

earned income also includes any part of a schol-

itemizing your deductions on Schedule A (Form

tacts and ensure that your case is given a com-

arship or fellowship grant that you must include

1040) if you:

plete and impartial review.

in your gross income. See Publication 520 for

To contact your Taxpayer Advocate:

more information on what qualifies as a scholar-

1) Do not qualify for the standard deduction,

ship or fellowship grant.

•

or the amount you can claim is limited,

Call the Taxpayer Advocate at

1 – 877 – 777 – 4778.

2) Had large uninsured medical and dental

Example 1. Michael is single. His parents

•

expenses during the year,

claim an exemption for him on their 2001 tax

Call the IRS at 1 – 800 – 829 – 1040.

return. He has interest income of $780 and

•

3) Paid interest and taxes on your home,

Call, write, or fax the Taxpayer Advocate

wages of $150. He has no itemized deductions.

office in your area.

4) Had large unreimbursed employee busi-

Michael uses Table 9 to find his standard deduc-

•

ness expenses or other miscellaneous de-

tion. He enters $150 (his earned income) on line

Call 1 – 800 – 829 – 4059 if you are a

ductions,

1, $400 ($150 plus $250) on line 3, $750 (the

TTY/TDD user.

larger of $400 and $750) on line 5, and $4,550

5) Had large uninsured casualty or theft

on line 6. The amount of his standard deduction,

For more information, see Publication 1546,

losses,

The Taxpayer Advocate Service of the IRS.

on line 7a, is $750 (the smaller of $750 and

6) Made large contributions to qualified chari-

$4,550).

Free tax services. To find out what services

ties, or

are available, get Publication 910, Guide to Free

7) Have total itemized deductions that are

Example 2. Joe, a 22-year-old full-time

Tax Services. It contains a list of free tax publi-

more than the standard deduction to which

college student, is claimed on his parents’ 2001

cations and an index of tax topics. It also de-

you otherwise are entitled.

tax return. Joe is married and files a separate

scribes other free tax information services,

return. His wife does not itemize deductions on

including tax education and assistance pro-

If you decide to itemize your deductions,

her separate return.

grams and a list of TeleTax topics.

complete Schedule A and attach it to your Form

Joe has $1,500 in interest income and

1040. Enter the amount from Schedule A, line

Personal computer. With your per-

wages of $3,600. He has no itemized deduc-

28, on Form 1040, line 36.

sonal computer and modem, you can

tions. Joe finds his standard deduction by using

access the IRS on the Internet at

Table 9. He enters his earned income, $3,600,

Itemizing for state tax or other purposes. If

While visiting our web site, you

on line 1. He adds lines 1 and 2 and enters

you choose to itemize even though your item-

can:

$3,850 on line 3. On line 5 he enters $3,850, the

ized deductions are less than the amount of your

•

Find answers to questions you may have.

larger of lines 3 and 4. Since Joe is married filing

standard deduction, write “IE” (itemized elected)

a separate return, he enters $3,800 on line 6. On

•

next to line 36 (Form 1040).

Download forms and publications or

line 7a he enters $3,800 as his standard deduc-

search for forms and publications by topic

tion because it is smaller than $3,850, the

Changing your mind. If you do not itemize

or keyword.

amount on line 5.

your deductions and later find that you should

•

View forms that may be filled in electroni-

have itemized — or if you itemize your deduc-

Example 3. Amy, who is single, is claimed

cally, print the completed form, and then

tions and later find you should not have — you

on her parents’ 2001 tax return. She is 18 years

save the form for recordkeeping.

can change your return by filing Form 1040X.

old and blind. She has interest income of $1,300

•

View Internal Revenue Bulletins published

and wages of $2,900. She has no itemized de-

Married persons who filed separate

in the last few years.

ductions. Amy uses Table 9 to find her standard

returns. You can change methods of taking

•

deduction. She enters her wages of $2,900 on

deductions only if you and your spouse both

Search regulations and the Internal Reve-

line 1. She adds lines 1 and 2 and enters $3,150

make the same changes. Both of you must file a

nue Code.

Page 19

Publication 501 - Exemptions, Standard Deduction, And Filing Information - 2001 Page 19

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