Itemized deductions are certain personal expenses that you can deduct to lower your taxes. For 1997, the categories of itemized deductions are:

1. Medical and dental expenses,
2. State and local taxes,
3. Home mortgage and investment interest,
4. Charitable contributions,
5. Casualty and theft losses,
6. Job expenses; and
7. Miscellaneous deductions.

Generally, you must decide whether to itemize or to use the standard deduction. It is usually to your benefit to itemize if your allowable deductions are more than your standard deduction. Some taxpayers should itemize because they do not qualify for the standard deduction. The standard deduction varies according to your filing status, age, whether you are blind, and whether you can be claimed as a dependent on another taxpayer's return. The basic standard deductions for 1997 are as follows:

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* Single                                            $4,150
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* Head of Household                                 $6,050
* Married, filing a joint return                    $6,900
* Married, filing a separate return                 $3,450
* Qualifying Widow or Widower with dependent child  $6,900

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An additional amount will be allowed if you or your spouse is age 65 or older
by January 1, 1998, or blind. If you can be claimed as a dependent on another person's return, your standard deduction may be limited. For further information on the additional standard deduction for the blind or elderly, and the limit for dependents, see Topic 551.

When a married couple files separate returns and one spouse can and does itemize deductions, the other spouse may not claim the standard deduction and must also itemize.

Some taxpayers are not eligible for the standard deduction. They include nonresident aliens, dual-status aliens, and individuals who file returns for periods of less than 12 months. Special rules apply to U.S. citizens with excludable income from U.S. possessions.

You may be subject to a limit on some of your itemized deductions. For 1997, this limit applies if your adjusted gross income is more than $121,200, or $60,600 if you are married filing separately. This limit applies to all your itemized deductions except medical and dental expenses, casualty and theft losses, gambling losses, and investment interest.

For more information on itemized deductions, see your Form 1040 instructions or order Publication 17, Your Federal Income Tax, by calling 1-800-829-3676.

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