Itemized deductions and personal exemptions are phased out (reduced) as your income rises. In 2008, the reductions are less painful. The cutback in itemized deductions occurs once your adjusted gross income exceeds $159,950, regardless of your filing status.
Your itemized deductions are reduced by 1% of the amount by which your AGI exceeds $159,950, but you can never lose more than 80% of your itemized deductions. Also, your medical expenses, investment interest deduction, deductible gambling losses and any casualty and theft losses are not subject to the cut.
Personal exemptions are reduced by 2% for each $2,500 of adjusted gross income over $239,950 for married filing jointly, $199,950 for heads of households and $159,950 for singles, but the reduction cannot exceed $1,167 per exemption.
Comments