The standard deduction on tax returns reduces your taxable income. The standard deduction does away with the need to itemize deductions. If your itemized deductions (Form 1040 Schedule A) exceed the standard deduction, it is better to claim your itemized deductions. This enables you to keep more of your hard-earned money where it belongs: with you.
Determining Filing Status
Your standard deduction depends on your filing status---married filing jointly, married filing separately, single, head of household, divorced, qualifying widow or widower, or dependent. To qualify as a head of household, you must have provided more than 50 percent of the financial support for the household. If you can be claimed as an exemption on someone else's return, you are considered a dependent. The standard deduction increases for people who are over 65, who are blind (regardless of age) or who are both.
Basic Standard Deduction Amounts
The standard deduction amounts for 2010 are $5,700 (for taxpayers who are single, divorced or married filing separately); $11,400 (for taxpayers who are married filing jointly or are qualifying widows or widowers); and $8,400 (for taxpayers who are head of household). For dependents, the standard deduction amount is the larger of $950 or their income plus $300 (not to exceed $5,700).
Additional Standard Deduction Amounts
For married couples where one spouse is senior or blind, the standard deduction increases by $1,100. For married couples where one spouse is senior and blind, it increases by $2,200. For single seniors and single people who are blind, it increases by $1,400 (this also applies to heads of households). For heads of households or single seniors who are also blind, the additional amount is $2,800. For senior couples who are blind, the additional amount is $4,400. Restrictions apply for married couples who file separately.
Total Standard Deductions
The standard deduction amounts are $5,700 (single), $8,500 (unmarried seniors), $8,500 (single and blind), $8,400 (heads of household), $9,800 (senior heads of households), $9,800 (heads of households who are blind), $8,500 (single seniors who are blind), and $11,200 (senior heads of households who are blind). The standard deduction amounts for married couples are $11,400 (married filing jointly), $12,500 (when one spouse is senior or blind), $12,500 (when both spouses are senior or blind), and $15,800 (when both spouses are senior and blind). For couples filing separately, the deductions are one half of the joint deductions.
Restrictions for Blindness
The IRS definition of being blind means having 20/200 vision in the better eye with glasses or contacts or having a field of vision of less than 20 degrees, or both. To substantiate blindness, a written doctor's note must be kept permanently with your tax records.
Consider itemizing your deductions, especially if you paid mortgage interest, had significant medical expenses, paid property taxes, made significant donations to charities or had a major disaster loss. Also consider that some itemized deductions subjected to limitations can be carried over into the next year or carried forward from previous years.