Assignment 1 Answers.docx - Discussion Question 3-5(LO 2 In...

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Discussion Question 3-5 (LO. 2) In choosing between taking the standard deduction and itemizing deductions from AGI, what effect, if any, does each of the following have? a. The age of the taxpayer(s). The age of the taxpayer may favor the standard deduction if the taxpayer is age 65 or older. Feedback In lieu of claiming itemized deductions, taxpayers can use the standard deduction. The effect of the standard deduction is to exempt part of a taxpayer's income from Federal income tax liability. The standard deduction is the sum of two components: the basic standard deduction and the additional standard deduction. Certain taxpayers are not allowed to claim any standard deduction, and the standard deduction is limited for others. The standard deduction amounts are subject to adjustment for inflation each year. . A taxpayer who is blind qualifies for an additional standard deduction of $1,300 or $1,650, depending
on filing status. c. Whether taxpayers rent or own their residence. .
d. Taxpayer's filing status (e.g., single, married, filing jointly). Because the amount of the standard deduction varies depending on filing status, this factor is highly relevant to the decision. Feedback Correct Answer: standard deduction. In lieu of claiming itemized deductions, taxpayers will use the standard deduction. The amount of the standard deduction varies depending on filing status, age, and blindness. Therefore, this factor is highly relevant to the decision. e. Whether married taxpayers decide to file separate returns. If married persons file separate returns and one spouse itemizes, the other spouse also must itemize . Feedback Correct Answer: also must itemize. Some individual taxpayers are ineligible to use the standard deduction and must therefore itemize. If married persons file separate returns, the returns must be consistent in the choice made. Thus if one spouse itemizes, the other spouse must also itemize.

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