IRS stats show that two thirds of all individual taxpayers claim the standard deduction rather than itemizing deductions on Schedule A.
It works like this: The government gives you a certain amount as a deduction against your taxable income simply for breathing. This so-called Standard Deduction is meant to partially equalize the tax bite on those who rent with those who own and deduct mortgage interest, property taxes, and the like. If you have more deductible expense than the standard deduction amount, then you get to deduct the excess. It is a crude but reasonably effective method.
The deduction amounts are higher in 2008. The exact amount depends on your filing status, whether you're 65 or older, blind, or if an exemption can be claimed for you by another taxpayer.
- Single - $5,450
- Married filing separately - $5,450
- Head of household - $8,000
- Married taxpayers filing jointly / qualifying widow(er)s - $10,900
- Married taxpayers filing separately - $5,450
If you are over 65 add an additional $1,050 for married filers and $1,350 for single and head of household filers. Married filers older than 65 and blind add $1,050 x two, single filers older than 65 and blind and $1,350 x two.