Joint Tax Return Issues - Essay Example

Standard deductions are income amounts that non-itemizers subtract from their contributed income based on the filing status. Examples of such deductions are medical expenses, charitable contributions, home mortgage interest and property taxes.

Itemized deductions are deductions from the taxpayer’s gross income for money spent on goods and services throughout the year. The deductions convert taxable income into non-taxable income that one spends on various taxes privileged items. Examples of such itemized deductions are interest paid on investments, casualty and theft losses, hobby expenses and cash contributions to charities and churches.

A thorough examination of the items in the joint tax return reveals that the following items will be claimed: firstly, the real estate tax for example registration fees for motor will be claimed to convert the taxable amount to non-taxable income. Moreover, the interest margin paid on the investments of the couple either jointly or separately is claimed (Genders, 2013). Additionally, medical expenses for the betterment of a couple’s life shall be accounted for in a joint tax return to relieve them. Nevertheless, expenses and charitable contributions that are contributed by the couple will be claimed for deduction in the process of taxation.

From the above calculation, 2013 has a better taxable income to the revenue authority because of the fewer personal exemptions deductions that are deducted from the adjusted gross income. For instance in the scenario in, we have a taxable income of $102800 as compared to 2014 where we have a taxable income of $ 102750. The effect is brought in by a decrease in personal exemptions by $50.

Other issues to be identified are: the age of the couple whether they are above 65 years or less. This helps in the determination of the standard deductions. The aspect of blindness is another key issue of concern to determine whether the couple is blind for additional deductions (Finney, 2010). Additionally, the social security amount will be identified for the investment scheme.

From the computation of the taxable income in 2013 and 2014 respectively, it can be observed that there is a reduction in the taxable income by $50 due to an increase in personal exemptions from $3900 to $3950. Therefore, the couple should close the property purchase in December 2013 because, from the taxation point of view, the increase in personal exemptions reduces the amount of income that is subjected to Federal Income Tax. Therefore, the repurchase in December personal exemption of $3900 consequently increase the taxable income for the couple by $50 as compared to January 2014 which is an advantage to the couple’s income.