Electing to Itemize

[dyne]

Can taxpayers elect to itemize on a joint return even though the total itemized deductions
total LESS than the standard deduction ? What do you experts think ?
The reason: By doing so, it saved them $1,000 in federal tax. When NOT itemizing, the
AMT raised their tax causing them to owe $1,000 MORE. By itemizing the AMT
did NOT apply. I forced the AMT and checked AMT in both computations. I assume that
this is just a quirk that will rarely be encountered. I quoted IRC 63(e)(1) and (e)(2) but looking
closer this may not be the proper authority.

[Matt Sova]

Yes

They can itemize as opposed to using the standard deduction.

[Bees Knees]

There is a check box on line 29 of Schedule A just for that very election.

[dyne]

electing to itemize

The POINT I was trying to make was: Normally if the Standard Deduction is larger
than the itemized deductions, your federal tax liability is REDUCED. In this rare
case by claiming the larger standard deduction, the tax liability INCREASED.
The cause was the AMT. So, I forced the computer to itemize, even though the
itemized deductions were about $4,000 LESS than the standard deduction and by
so doing the tax liability DECREASED by about $1,000. Normally this would cause
the tax to increase. My question is in this rare type of situation can the taxpayer
elect to itemize ? I think so, but I have never encountered this situation.
Any comments ?

[John of PA]

Not rare

This is not rare, in fact the Lacerte Diagnostics make a comment on this whenever there is an AMT. Sometimes (maby one out of 50 cases) the AMT can be lowered by taking the lower Std Deduction, rather than itemizing, or vice versa.

[dyne]

electing to itemize

Again in my case the standard deduction is HIGHER, not lower. The itemized deductions
were about $8,800 whereas the standard deduction was $12,000. THIS is what seemed
strange to me.

[dtlee]

Some Itemized are not added back

The standard deduction is completely omitted as a deduction when the AMT is calculated. However, there are specific itemized deductions which are still allowed for AMT purposes. Thus, while the entire standard deduction would be added back on the 6251, only a portion of the itemized deductions would be.

[Bees Knees]

The POINT I was trying to make was: Normally if the Standard Deduction is larger
than the itemized deductions, your federal tax liability is REDUCED. In this rare
case by claiming the larger standard deduction, the tax liability INCREASED.
The cause was the AMT. So, I forced the computer to itemize, even though the
itemized deductions were about $4,000 LESS than the standard deduction and by
so doing the tax liability DECREASED by about $1,000. Normally this would cause
the tax to increase. My question is in this rare type of situation can the taxpayer
elect to itemize ? I think so, but I have never encountered this situation.
Any comments ?

Like I said, there is a check box on line 29 of the Schedule A to itemize even though the standard deduction is higher. That is the point of checking the box on line 29...when the tax is lower by itemizing even though the standard deduction is higher than itemizing.

Why else would there be a check box on line 29?

[John of PA]

Well put Doug

The standard deduction is completely omitted as a deduction when the AMT is calculated. However, there are specific itemized deductions which are still allowed for AMT purposes. Thus, while the entire standard deduction would be added back on the 6251, only a portion of the itemized deductions would be.

Well put Doug, that explains it. I always check for this phonomina(sp) at the prompting of my software whenever there is AMT, but I have only seen it save once, but it makes total sense.

[dyne]

electing to itemize

Thank you Bees Knees:
I did not comprehend what you were telling me until you repeated it.
Thanks. Best wishes.
Fred

[Deltax]

Like I said, there is a check box on line 29 of the Schedule A to itemize even though the standard deduction is higher. That is the point of checking the box on line 29...when the tax is lower by itemizing even though the standard deduction is higher than itemizing.

Why else would there be a check box on line 29?

You also check the box when a couple files MFS and one of them itemizes