Transcripts

Kevin McCormally's Tax Tips: The Standard Deduction Isn't The Only Deduction

SUSIE GHARIB: And just five days left until your Federal income tax return has to be filed with the IRS. Tonight, as we continue our week-long series of last minute tax tips, some help for the millions of Americans who don`t itemize their deductions. Here`s Kevin McCormally, editorial director of "Kiplinger`s Personal Finance."

KEVIN MCCORMALLY, EDITORIAL DIR., "KIPLINGER`S PERSONAL FINANCE": I hear from a lot of people this time of year kvetching that they get a raw deal from the tax man. They don`t itemize and they`re so jealous of taxpayers who get to write off their medical expenses and their charitable contributions and their mortgage interest and their property taxes and what they pay for tax advice and all the other things that itemizers use to cut their tax bill.

I`m sorry, but I`m not sympathetic. It`s not that I`m hard hearted. It`s just that I know that non-itemizers actually get the better deal. The only reason to claim the standard deduction, which about 70 percent of all taxpayers do, is when it`s worth more to you than all your legitimate, eligible deductible expenses. On 2005 joint returns, non-itemizers get a standard deduction of $10,000, no questions asked. Singles get $5,000 again, without having to pour through any paperwork to prove it. But taking the standard deduction doesn`t mean forsaking all other tax deductions.

Heck, there are still all sorts of write-offs for non-itemizers, the so-called "above the line" deductions. There`s a $250 deduction for teachers and a $3,000 write off for college tuition. You can deduct job- related moving expenses, interest paid on student loans and alimony you paid. Did you buy a hybrid car or contribute to a traditional IRA or a health savings accounts? Then you get write-offs above and beyond the standard deduction. Just released IRS statistics show that on 2004 returns, taxpayers claimed $94.5 billion worth of these "adjustments to

income" deductions that are open to itemizers and non-itemizers alike. Make sure you get your share. I`m Kevin McCormally.