Standard deduction amounts
The amount you can claim depends upon your filing status and age.
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For taxpayers younger than 65, the amounts are:
|Head of household||$8,000|
|Married filing jointly||$10,900|
|Qualifying widow or widower||$10,900|
|Married filing separately||$5,450|
Standard deductions for older, visually impaired taxpayers
Taxpayers age 65 or older, as well as visually impaired/blind filers, are allowed larger standard deduction amounts. To determine which amount you can claim, you must check the appropriate boxes on your Form 1040 or Form 1040A (Form 1040EZ is not available to filers age 65 or older). On line 39A of Form 1040 (line 23A of Form 1040A) the boxes you can check are as follows:
- You were born before Jan. 2, 1944.*
- Your spouse was born before Jan. 2, 1944.*
- You are blind.**
- Your spouse is blind.**
Based on the number of boxes checked, your standard deduction will be:
|Filing status||Number of boxes checked||Standard deduction amount|
|Married filing jointly||1
|Married filing separately||1
|Head of Household||1
* If your 65th birthday is Jan. 1, the IRS considers you age 65 for the previous tax year and you may claim the larger standard deduction.
** You may qualify for the larger deduction even if you are partially blind by attaching a letter from your physician attesting to your limited vision.
Standard deduction option for property taxes
New in 2008, taxpayers who do not itemize can add an additional amount to their standard deduction in connection with real estate taxes paid. The maximum added standard deduction amount is up to $500 for single, married filing separately or head of household filers, up to $1,000 for married couples who file joint returns. This additional standard deduction amount also is available for the 2009 tax year.
Standard deductions for dependent taxpayers
Sometimes you might file a return, for example, to get a refund of withheld money, even though you can be claimed as a dependent on someone else’s return.
In this case, a dependent taxpayer who is younger than 65 and not blind can take as a standard deduction the greater of $900 or his or her earned income plus $300. This deduction amount, however, cannot exceed the basic standard deductions for the dependent taxpayer’s filing status, which in 2008 is $5,450.
Although most taxpayers claim the standard deduction, all taxpayers may choose to itemize deductions and claim that amount if it is larger than their allowable standard deduction amount.
Some itemized deductions are limited based on a taxpayer’s adjusted gross income. For 2008, the following limits apply to itemized deductions:
|Medical expenses||Amount exceeding 7.5 percent of your adjusted gross income, or AGI, is deductible|
|Mortgage loan interest||Generally fully deductible for loans totaling $1 million or less on your primary residence or second home|
|Home equity loan interest||Generally deductible for loans up to $100,000 that are secured by your home|
|Charitable contributions||Most are fully deductible as long as the gift amount does not exceed 50 percent of AGI|
|Casualty losses||Deductible after subtracting insurance reimbursements, 10 percent of your AGI and $100|
|Miscellaneous expenses||Amount exceeding 2 percent of AGI is deductible|
In addition, overall itemized deductions also could be reduced if a taxpayer’s AGI exceeds a certain amount, adjusted annually for inflation. For 2008 returns, the reduction of total itemized deductions begins for a taxpayer with an AGI of $159,950. This income level applies to single, head of household and married filing jointly taxpayers. Taxpayers who are married but file separate returns will see their itemized deductions reduced on AGI of $79,975 or more.