Final answer:
The statement is False. Taxpayers decide between taking the standard deduction or itemizing deductions; both can be claimed in addition to deductions for AGI.
Step-by-step explanation:
The statement is False. Under the Federal income tax formula for individuals, a choice is made between claiming the standard deduction or itemized deductions, not deductions for Adjusted Gross Income (AGI).
Deductions for AGI are known as "above-the-line" deductions and can be taken in addition to the standard deduction or itemized deductions. The standard deduction is a flat amount that reduces taxable income and varies depending on filing status, while itemized deductions consist of a list of eligible expenses (such as mortgage interest, state taxes paid, and charitable contributions)
When added together, can also reduce taxable income if they exceed the standard deduction amount. Therefore, taxpayers choose between the standard deduction and itemizing deductions based on which option provides the greater tax benefit.