So, my standard deduction is higher than my itemized deductions.

I have a sole proprietorship, however, and I HAVE to itemize because of it.

My sole proprietorship is a very small internet business, it’s not really income, it’s a hobby, but was told to claim it to not get in trouble with the big boys.

I was wondering if, when I do my taxes, I would be taxed on more of my income because my standard deduction is higher than my itemized?

He prefers the optional standard deduction. For the taxable year 2006, below are additional data:

Gross business income 1, 500, 000
Gross compensation income 600, 000
Itemized Deductions 500, 000
Premiums paid on health ins. 20, 000
Prizes won in a billiard tournament 100, 000

What is the taxable income?
What is the tax due?

FOR AGI deductions reduce AGI, the importance of classification is because the AGI is used for establishing limits on certain deductions FROM AGI such as medical expenses, education expenses, property taxes, charitable contributions, and interest found in the itemized deductions. Generally, deductions FOR AGI are related to business expenses while, deductions FROM AGI are personal in nature.

— Broaden the 1.45-percent Medicare tax on earned income to “passive income,” which could include money from capital gains, rental properties and businesses that do not require direct participation. This could raise 0 billion.

— Levy a five-percent surtax on individuals who earn more than 0,000 and couples that make million.

— Tax health benefits at a higher level than had been considered. Two scenarios are in play. Taxing plans worth more than ,300 for a family and ,300 for an individual could raise 0 billion. Increasing the cut-off to plans worth more than ,000 would bring billion.

— Capping the tax break on itemized deductions at 28 percent, as President Barack Obama had proposed, or freezing the top deduction rate at 35 percent when the Bush tax cuts expire in 2010. The first scenario would raise 8 billion, while the second would collect billion.

— Issue tax credit bonds to pay for the proposed Medicaid expansion, raising billion.

— Charge fees to pharmaceutical manufacturers, bringing in as much as billion, and insurance providers, raising billion.

– Raise taxes on sodas and sugary drinks. A 3-cent hike could pick up billion, and a 10-cent hike could make 0 billion. This one already appears out of favor: Many senators have specifically ruled out the sugar tax, and a Senate Democratic source said it was the one option that was clearly not gaining traction with committee members.

http://www.politico.com/news/stories/0709/24752.html

— Broaden the 1.45-percent Medicare tax on earned income to “passive income,” which could include money from capital gains, rental properties and businesses that do not require direct participation. This could raise 0 billion.

— Levy a five-percent surtax on individuals who earn more than 0,000 and couples that make million.

— Tax health benefits at a higher level than had been considered. Two scenarios are in play. Taxing plans worth more than ,300 for a family and ,300 for an individual could raise 0 billion. Increasing the cut-off to plans worth more than ,000 would bring billion.

— Capping the tax break on itemized deductions at 28 percent, as President Barack Obama had proposed, or freezing the top deduction rate at 35 percent when the Bush tax cuts expire in 2010. The first scenario would raise 8 billion, while the second would collect billion.

— Issue tax credit bonds to pay for the proposed Medicaid expansion, raising billion.

— Charge fees to pharmaceutical manufacturers, bringing in as much as billion, and insurance providers, raising billion.

– Raise taxes on sodas and sugary drinks. A 3-cent hike could pick up billion, and a 10-cent hike could make 0 billion. This one already appears out of favor: Many senators have specifically ruled out the sugar tax, and a Senate Democratic source said it was the one option that was clearly not gaining traction with committee members.

http://www.politico.com/news/stories/0709/24752.html

Or are they no longer a reputable source?

From Investor’s Business Daily:

Obama has proposed effective tax increases of 20% or more in the two top income-tax rates, phasing out the personal exemptions and all itemized deductions for top earners, as well as raising their tax rates.

He wants a 33% increase in the tax rates on capital gains and dividends, an increase of 16% to 32% in the top payroll tax rate, reinstatement of the death tax with a 45% top rate, and a new payroll tax on employers estimated at 7% to help finance his health insurance plan. He’s also contending for higher tariffs under his protectionist policies.

Finally, he would increase corporate taxes by 25%, though American businesses already face the second-highest marginal tax rates in the industrialized world, thus directly harming manufacturing and job creation while weakening demand for the dollar.

My employer does not provide health insurance. After extensive research, my wife and I found a suitable policy for ourselves that provided sufficient insurance coverage without breaking the bank. The major downside I see is that we are paying for the coverage with post tax money – yes our premium goes toward our itemized deductions, but that is no where near comparable to paying with pre-tax money. Am I wrong about this? Is there a better way to approach this?
It just doesn’t seem right that I am punished merely because my employer is a small business, not able to participate in a group insurance plan.

And I mean flat across the board. Everybody pays 5%, for example. But to make sure everybody pays that 5%, no exemptions for yourself or dependents. Not deductions for work, charitable donations, etc. No deductions for business losses. Capital gains are considered income and taxed at the same rate. So you bought your house for K, sold it for 0K, you made k that year, it gets taxed like any other income. You inherited cash property or anything else, it’s income and gets taxed 5%. And all income gets taxed the exact same 5%. No hiding money for the future in 401(k) plans or IRA plans–no need to anyway, since the flat tax defeats the purpose. All income of any kind, a flat tax. No exceptions, including churches, which are currently tax exempt.

Anybody for that?
Let me clarify some things about my question. One, I am not sure whether I am for a flat tax or not. But I have thought that richer people have more opportunities to get out of paying taxes than poorer people do. So I wondered if richer people would still be for a flat tax if the the playing field were completely level–ie, no tax-sheltered retirement accounts, no itemized deductions for charitable contributions, no loopholes of any kind, as well as calling and income at all as taxable income, including the sale of private property, and also doing away the the tax-excempt status churches and not-for-profit organizations enjoy. Totally fair. Would they still go for it?

Hello,

I am wanting to do my taxes myself this year and I am kinda confused with deductions. I am going to use "STANDARD DEDUCTION" this year and I know that I can itemize a few things like business related expenses with my standard deduction. I thought I couldn’t write off business deduction becouse it was either standard deduction or itemized deductions, this is true but I talked to a few people at jackson hewitt and they told me that I can write off business expenses with a standard deduction. I wanted to get you guys input as well as ask what are exact things I can write off for business expenses while using a standard deduction. If you have a webpage I can visit to answer my question that would be wonderful too. I know you guys are pros so thats why I am coming to you for my questions.

Thank you so much for your time and all of you input will be highly valued and used.

Take care!

I use my home for small business. However every time I put in expense like cell phone or utilities, I got less refund. Before I put in any expense, I can get 00 refund, but if I add cell phone or utilities expense 00 for my home business, the refund will be lowered to 00.
Also it won’t help on mortgage interest and property tax, since you already deduct them with your normal itemized deductions.
What’s the problem with this? I think atleast I can deduct some expense.
I am not getting EIC.