Which are the following is (are) true about the standard deduction and itemized

Question

Which are the following is (are) true about the standard deduction and itemized deductions:

1. Only one can be used on the individual's tax return

2. Itemized deductions are used when you own a residence and standard deduction is used when you don't

3. On the same return, a husband can use a standard deduction and the wife can use itemized deductions

4. Both are subject to reduction when a cap is reached

(1) only

(1) and (2) only

(1) and (4) only

(2), (3) and (4) only

(1) only

(1) and (2) only

(1) and (4) only

(2), (3) and (4) only

Explanation / Answer

Only answer (1) is true-Only one can be used on the individual's tax return as the tax payer has the choice.

(2)-Itemized deductions are used when you own a residence and standard deduction is used when you don't-incorrect

(3) In the same return, a husband can use a standard deduction and the wife can use itemized deductions-not allowed hence in correct

( 4)Both are subject to reduction when a cap is reached-The standard deduction is a set amount based on a person's filing status. Itemized deductions are also limited when a taxpayer's AGI exceeds certain limits based on his filing status. Hence, both have a cap but standard deduction will not be reduced since it is a fixed amount, hence this statement is incorrect.

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