Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15. Here, MDCPA members answer some basic questions.
Q. When is it better to itemize rather than take the standard deduction?
A. Itemize only if the deductions exceed the standard deduction. For 1998, the standard deduction has increased to $7,100 for married filing jointly; $4,250 for singles; $6,250 for head of household and $3,550 for married filing separately. For people who are blind or over the age of 65, the standard deduction is $5,300 for single taxpayers, $7,950 for married filing jointly (assumes only one taxpayer is over 65 or blind), $4,400 for married filing separately and $7,300 for head of household. Amounts increase when taxpayers are both blind and over 65 or for additional blind or over 65 taxpayers. A limit on some itemized deductions may apply for gross incomes greater than $124,000 ($62,500 for married filing separately).
Q. How are earnings from money market funds reported on your tax return?
A. The IRS considers some investment income, including earnings from money market funds, as dividends. Taxpayers often mistakenly report such earnings as interest income.
The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.
To ask a tax question, call Sundial, The Sun's telephone information service, at 410-783-1800. Call 410-268-7736 in Anne Arundel County, 410-836-5028 in Harford County, 410-848-0338 in Carroll County. Using a Touch-Tone phone, punch in the four-digit code 6225 after the greeting. You can also submit questions by e-mail through The Sun's Web site: www.sunspot.net. Click on Business.
Selected questions will be answered in the Business section. No questions will be answered personally.
Pub Date: 2/03/99