Re: [CANSLIM] Deduction Subject to 2% Limit

From: "Charles & Lois Layne" <lelayne@earthlink.net>
Subject: Re: [CANSLIM] Deduction Subject to 2% Limit
Date: Wed, 23 Jul 2003 07:32:02 -0400

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- ----- Original Message -----

>
>    I got a dumb question.  Even you can put IBD subscription and
> breakoutwatch.com online service fee into Schedule A as investor, is it
> worth to give up Standard Deduction?  For married filling jointly, the
> standard deduction is $7,850.   Can you put partial of your mortgage or
> rent onto Schedule A as investment expenses?   If not,  what is big
> chunk of miscellaneous itemized deduction?
>

I hope it's not a dumb question.  It becomes worthwhile itemizing on
schedule A if applicable deductions exceed the standard deduction.  That's
the bottom line.  Typically, if a taxpayer does not have some of the
"biggies" on sched A, such as deductible mortgage interest, then it is
probably not worth the effort figuring those expenses that are subject to
the limits since there just won't be enough to exceed the standard
deduction.

There are rules for "home office" use, but they can become so ponderous to
track and calculate that the payoff is not worth the effort.  For instance,
how many people use a home office/workspace ONLY for the purpose of
generating income?  Your computer, file cabinets, desk drawers, etc. contain
ONLY those things needed to invest and/or conduct some other income
producing business?

As stated, sched A is useful only to the extent that total itemized
deductions exceed the standard deduction.  If that's the case, then by all
means, try to capture all legitimate expenses - even those subject to a
limit such as out of pocket medical expenses.  Sched A is also useful if one
is using a filing status that disallows the standard deduction (married
filing single, I believe) or if the taxpayer elects not to take the standard
deduction because of some tax advantage at the state income tax level (not
usual, but I have heard of it; depends on the state tax laws).

As with all tax issues, contact with a tax professional is always
recommended for issues that are difficult to resolve.


Chuck Layne




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