Millions of taxpayers who itemized deductions in the past won't get to do so this year. And that's good news for them.
As part of its effort to eradicate the “marriage-tax penalty,” Congress significantly increased the standard deduction for married couples -- from $7,850 in 2002 to $9,500 on 2003 returns. The new number is exactly twice as much as the standard deduction for single returns. So no longer does getting hitched during the year mean a couple has to settle for a smaller deduction than two singles. The big jump means about 3 million couples who used to benefit by itemizing -- because the total of their qualifying expenses exceeded their standard deduction amount -- will save more this year by claiming the standard deduction.
If you’re among those shifting from itemizing to the standard deduction, or among the 70% or so of taxpayers who always use the standard write-off, you might think you're getting the short end of the stick. After all, itemizers get to deduct state income and property taxes, mortgage interest and charitable contributions.
But don't fret: Non-itemizers actually get the better deal. The only reason to claim the standard deduction is when it's worth more to you than the total of all your deductible expenses. As noted above, on a joint return, you get a standard deduction of $9,500 -- no questions asked -- regardless of how much you really spent on state taxes and interest and charitable gifts. (If one spouse is 65 or older, the standard deduction is $10,450; if both are 65 or older, it’s $11,400.) The 2003 standard deduction for singles is $4,750 ($5,900 if you’re at least 65). Heads of household can claim $7,000 ($8,150 if you’re 65 or older).
Tomorrow: Powerful tax-saving write-offs for nonitemizers.
GETTING STARTED
