Itemizing vs. the Standard Deduction
In order to claim per diem allowance or business expenses, you must be able to itemize
deductions on your 1040 tax return. Generally, you have the option to claim the standard deduction,
or to itemize your deductions. IRS regulations permit you to select whichever method provides
the greater tax deduction, and sometimes the standard deduction is more advantageous. For 2005,
the standard deduction amounts are:
| Filing Status |
2005 Standard
Deduction Amount |
| Married filing jointly & surviving spouses |
$10,000 |
| Married filing separately |
$5,000 |
| Head of household filers |
$7,300 |
| Single filers |
$5,000 |
To benefit from itemizing, your deductible expenses need to exceed the above amounts.
Expenses you can itemize include home mortgage interest, real estate taxes, medical expenses,
charitable contributions, and fees paid to prepare your pilot or flight attendant tax return, as well as your per
diem allowance and your travel-related business expenses. Note, however, that nearly all
of these expenses have certain limitations. You need to consult with your tax professional
to determine the applicability in your instance.
Generally we find that purchasing one's home is the event that permits itemizing, but we
have seen circumstances where the per diem and business expenses alone were sufficient to
permit itemization.
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