Questions for the Tax Lady: May 10th, 2010

Check out the following new Questions for the Tax Lady answers and feel free to ask me questions through one of the links below. You can send me an email, direct message or @ reply, and I will do my best to get an answer for you!

Question #1: How much money do you need to make to benefit from itemizing your return?

There actually is no income range that will determine whether you would benefit more from claiming the standard deduction or itemizing your return. It all depends on how many deductions you qualify for. Add up the dollar amount of all the deductions in which you would qualify and if the total is higher than the standard deduction, you should itemize your return. If it is lower, then you should claim the standard deduction.

Question #2: I am in the process of filing bankruptcy. Will I need to include the resulting canceled debts on my tax return next year?

No. A taxpayer will not need to include debt canceled by bankruptcy if the cancellation of debt is granted by the court or occurs as a result of a plan approved by the court. None of the debt canceled in a bankruptcy case is included in the debtor’s gross income in the year it was canceled.