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The standard deduction is a dollar amount that reduces the amount of income subject to tax. You cannot take the standard deduction if you are claiming itemized deductions. The amount of standard deduction is based on a taxpayer’s filing status. The standard deduction amount can change from year to year depending upon inflation. Higher Standard Deduction There

The American Opportunity and Lifetime Learning credits are available to individuals for out-of-pocket tuition expenses incurred by students pursuing college degrees, graduate degrees or vocational training. The American Opportunity Credit covers four years of post-secondary education, adds required course materials to qualifying expenses, makes the credit available at higher income levels, and increases the amount of the

Certain expenditures qualify as a deduction for your taxes. These expenditures are referred to as itemized deductions. In general, if your total itemized deductions exceed the standard deduction, you should itemize. This includes these situations: You do not qualify for the standard deduction, or the amount of the standard deduction is limited You have large, uninsured medical

Whether you must file a return depends on your gross income, filing status, and age. Gross Income Gross income includes all income that you receive in the form of money, goods, property, and services. It does not include any income that is tax-exempt. Filing Status Your filing status is determined on the last day of

A tax credit reduces the amount of tax for which you are liable. Unlike a deduction, which reduces the amount of income subject to tax, a tax credit directly reduces your tax liability. A tax credit is thus usually more valuable than a tax deduction of the same dollar amount. There are two categories of tax

Withholding The federal income tax is a pay-as-you-go tax. You must pay taxes as you earn or receive income throughout the year. There are two methods for paying taxes: Withholding If you are an employee, your employer probably withholds income tax from your paycheck. Income received from pensions, bonuses, commissions, gambling winnings, and other sources may also

Exemptions cut your taxes by subtracting a set amount from your taxable income. You are allowed a personal exemption for yourself, your spouse if married filing jointly, and each person you can claim as a dependent. For 2013, the exemption amount is $3,900. You can take a personal exemption for yourself unless another taxpayer can

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