Transcripts

"Kevin McCormallys"- Write-offs for Non-itemizers

SUSIE GHARIB: Well, the tax season is in the home stretch. There are just six days left to get your Federal income tax return in the mail. So all this week we have helpful hints on getting the paperwork done. In tonight's tax tips, Kevin McCormally of "Kiplinger's Personal Finance" tackles write-offs for non-itemizers.

KEVIN MCCORMALLY, EDITORIAL DIR., KIPLINGER'S PERSONAL FINANCE: Here's a tax riddle: who gets the better deal, taxpayers who claim the standard deduction or those who itemize? At first blush, itemizers appear to be in the cat bird seat. After all, they get to cut their tax bills by deducting their mortgage interest and state income and property taxes, medical expenses and charitable gifts, even interest on home equity loans used to pay for vacations and new cars.

But truth be told, it's the 90 million Americans who claim the standard deduction - that's about two-thirds of all taxpayers -- who get the better deal. Remember, you use the standard deduction only when it saves you more money than itemizing would. On 2007 returns, married couples can deduct $10.700, no matter how little they actually spent on deductible items. Singles get a $5,350 standard deduction, no questions asked, no paperwork involved. And remember, there's a long list of write- offs open even to those who claim the standard deduction. There's the $250 deduction for teachers and the $4,000 write off for college tuition. Non- itemizers can deduct job-related moving expenses, interest paid on student loans and alimony.

Self-employeds can deduct the cost of their health insurance. Contributions to traditional IRAs and HSAs can be written off of course, and members of the National Guard who travel more than 100 miles to overnight meetings can deduct their travel expenses. Last year, taxpayers claimed about $100 billion worth of these so-called adjustments to income and a big share of the tax savings went to folks who claimed the standard deduction. I'm Kevin McCormally.