5. Alternative Minimum Tax: Alternative minimum tax is applicable if an individual s taxable revenue is more than a predefined amount. In that case, the individual would otherwise pay negligible tax now has to shell out a certain amount, which lowers the advantages of certain deductions and credits.
6. Itemized Deductions: The alternative to the standard deduction is itemized deductions. For the year 2004, the major items included in itemized deductions were:
i) State and local income and property taxes
ii) Donations made to charitable organizations
iii) Employee transference expenses
iv) Medical expenses incurred
v) Casualty losses
vi) Interest paid on mortgage
However, the individual can either avail standard deduction or itemized deduction.
Keywords: Tax Deductions, Tax Savings, Tax Planning