Have to itemize?

[oceanlovin'ea]

Just finished client's s corp return. Was curious as to what their refund was going to be on their personal. She does her own personal.

They have his w-2 for s corp and k-1 and they have 4 children. If they don't itemize, they get almost $4000 back. So I plugged in some figures on the schedule A because I am sure they have high enough mortgage interest to itemize. Then they got less back.

The EIC and Additional child tax credit are the same. The difference is $218 from the recovery rebate credit.

They are better off not to itemize this year. They don't have to itemize if they don't want to, do they? I'm sure that there are some people that just don't want to bother with itemizing.

Linda

[ChEAr$]

Of course not

Just finished client's s corp return. Was curious as to what their refund was going to be on their personal. She does her own personal.

They have his w-2 for s corp and k-1 and they have 4 children. If they don't itemize, they get almost $4000 back. So I plugged in some figures on the schedule A because I am sure they have high enough mortgage interest to itemize. Then they got less back.

The EIC and Additional child tax credit are the same. The difference is $218 from the recovery rebate credit.

They are better off not to itemize this year. They don't have to itemize if they don't want to, do they? I'm sure that there are some people that just don't want to bother with itemizing.

Linda

Itemizing deductions is always elective.

[OtisMozzetti]

Itemizing isn't elective for MFS?

Itemizing deductions is always elective.

I believe that the rules concerning MFS filing say that "if your spouse itemizes, you must also itemize..." An ostensibly equivalent way of saying that is: "your standard deduction is zero if you and your spouse file MFS."

[OtisMozzetti]

Another example?

Itemizing deductions is always elective.

I once noticed that when the alt. min. tax is in play, then reducing or eliminating the amount of state income tax claimed as a regular tax itemized deduction can decrease the calculated total tax liability.

It may be that the decision to itemize deductions vs. to take a standard deduction is elective; but the decision to deduct all of the amount vs. only part of the amount of state income tax paid might not be (according to some "authorities") elective.

I would prefer to limit (elect) the deduction for state income tax paid to the amount of state income tax actually due. In that way, I would avoid any possible taxable recovery (with its problems such as increased AGI) during the next tax year.

[ChEAr$]

Well ..yeah!

I believe that the rules concerning MFS filing say that "if your spouse itemizes, you must also itemize..." An ostensibly equivalent way of saying that is: "your standard deduction is zero if you and your spouse file MFS."

The exception proves the rule (?) grin

However, the way IRS looks at it, if one of a MFS itemizes the other must also.
It's not if one takes the standard deduction, the other one must.

[Kram BergGold]

Makes No Sense To Me

I can think of only 3 reasons the RRC goes down.
1. You increase the Stimulus amont received in 2007
2. AGI went up
3. Their taxes are so low that it limits the credit.

I think you should review things in your scenario.

[FEDUKE404]

Taxable income and tax liability relevant

I can think of only 3 reasons the RRC goes down.
1. You increase the Stimulus amont received in 2007
2. AGI went up
3. Their taxes are so low that it limits the credit.

I think you should review things in your scenario.

If the only issue at play is itemizing versus not itemizing, then I vote for #3. (I would have to think what any AMT liability, such as from excess mortgage interest, might change.)

Original post only mentioned size of the refund, and not the tax liability before assumed credits.

FE

[oceanlovin'ea]

Moot point

She emailed me the other night and asked if I knew about the online program. I think IRS efile is what she used.
She said it was giving them a larger refund than she had figured...around $1000 more. She just wasn't sure if it was right. Told her I didn't know about the program, but if she wanted to email me her figures, I'd plug them in and see what I got. (She is one of my daughter's best friends and like my own kid, so I do more for her). I asked her what loss she came up with on her schedule C for selling Baby Splendor products.

She emails me back and says she put it on schedule a under unreimbursed employee expenses. The program put it on a 2106. So they ended up with over $17,000 in itemized deductions. AHHHHHHHHHHHHHHHHHHHHHHHHHHHHH!!!!!!!!
I told her that was not where it was supposed to be. I would help her fix it if she wanted me to.
She emails me back later.........I already sent it. I hope it doesn't get us in any trouble. I'll remember that for the future.

What are you to do with these people!!!!!!! She has a family - husband and 4 chilren under 10. They are trying to sell their house and move back to Florida. She is very active in a missionary work. Why does she think she should know about taxes! The first year they were incorporated, I helped her with the bookkeeping and she said she thought she could do the corporate return herself. I couldn't be that hard, could it? I said yes!! In a few weeks, she said I can't figure this out, I guess we need you to do the corporate return for us.

We will see what happens.

Linda

[JohnH]

What does she do if she (or one of the kids) needs an appendectomy - get out the kitchen knife & a bottle of alcohol?