The standard deduction, as defined under United States tax law, is a dollar amount that non-itemizers may subtract from their income and is based upon filing status. It is available to US citizens and resident aliens who are individuals, married persons, and heads of household and increases every year. It is not available to non-resident aliens residing in the United States. Additional amounts are available for persons who are blind and/or are at least 65 years of age.[1] The standard deduction is distinct from personal exemptions, which also are available to all taxpayers and dependents.[2] As one may not take both itemized deductions and a standard deduction, taxpayers generally choose the deduction that results in the lesser amount of tax owed.[3]
Contents |
Basic standard deduction
The applicable basic standard deduction amounts for tax year 2007 are as follows:[4]
| Filing status | Amount |
|---|---|
| Single | $5,350 |
| Married Filing Jointly | $10,700 |
| Married Filing Separately | $5,350 |
| Head of household | $7,850 |
| Qualifying widow(er) | $10,700 |
The applicable basic standard deduction amounts for tax year 2006 are as follows:
| Filing status | Amount |
|---|---|
| Single | $5,150 |
| Married Filing Jointly | $10,300 |
| Married Filing Separately | $5,150 |
| Head of household | $7,550 |
| Qualifying widow(er) | $10,300 |
Other standard deduction in certain cases
The standard deduction may be higher than the basic standard deduction if any of the following conditions are met:
- The taxpayer is 65 years of age or older;[5]
- The taxpayer's spouse is 65 years of age or older;[6]
- The taxpayer is blind (generally defined as not having corrected vision of at least 20/200 or as having extreme "limitation in the fields of vision"); and/or[7]
- The taxpayer's spouse is blind (see definition above).[8]
For each applicable condition, a taxpayer adds $1,050 to his/her standard deductions (for 2007).[9] However, the additional deduction is $1,300 for unmarried individuals and surviving spouses[10](defined generally as one whose spouse died within the previous two years).[11] For dependents, the standard deduction is equal to earned income (that is, compensation for services, such as wages, salaries, or tips) plus a certain amount ($300 in 2007).[12] A dependent's standard deduction cannot be more than the basic standard deduction for non-dependents, or less than a certain minimum ($850 in 2007).[13] Consider the following examples:
| Taxpayer | Standard Deduction in 2007 |
|---|---|
| 70 year-old single individual | $5,350 + $1,300 = $6,650 |
| 40 year-old single individual who is blind | $5,350 + $1,300 = $6,650 |
| Married couple, ages 78 and 80, one of whom is blind | $10,700 + $1,050 + $1,050 + $1,050 = $13,850 |
| Dependent who earns $200 in 2007. | $850 (minimum standard deduction for dependents) |
| Dependent who earns $2,000 in 2007 | $2,000 + $300 = $2,300 |
| Dependent who earns $6,000 in 2007 | $5,350 (maximum standard deduction for dependents) |
References
- 1040 Instruction Booklet for year 2005, Page 36.
- ^ I.R.C. §§ 63(c)(3), 63(f)(1)(A), 63(f)(2) (2007).
- ^ See I.R.C. § 151 (2007)
- ^ Samuel A. Donaldson, Federal Income Taxation of Individuals: Cases, Problems and Materials, 2nd Edition (St. Paul: Thomson/West, 2007), 27, 29.
- ^ Consumer Price Index Adjustments for 2007, Revenue Procedure 2006-53, 2006-48 I.R.B. 996.
- ^ I.R.C. §§ 63(c)(3), 63(f)(1)(A) (2007).
- ^ I.R.C. §§ 63(c)(3), 63(f)(1)(B) (2007).
- ^ I.R.C. §§ 63(c)(3), 63(f)(2)(A), 63(f)(4) (2007).
- ^ I.R.C. §§ 63(c)(3), 63(f)(2)(B), 63(f)(4) (2007).
- ^ Consumer Price Index Adjustments for 2007, Revenue Procedure 2006-53, 2006-48 I.R.B. 996.
- ^ Consumer Price Index Adjustments for 2007, Revenue Procedure 2006-53, 2006-48 I.R.B. 996.
- ^ I.R.C. § 2(a).
- ^ I.R.C. 63(c)(5); Consumer Price Index Adjustments for 2007, Revenue Procedure 2006-53, 2006-48 I.R.B. 996.
- ^ Consumer Price Index Adjustments for 2007, Revenue Procedure 2006-53, 2006-48 I.R.B. 996.
