Standard tax deduction amounts

how much tax deduction

By Kay Bell • Bankrate.com

Taxes » Tax Deductions » Standard Tax Deduction Amounts

Most taxpayers claim the standard deduction amount. The amounts are adjusted each tax year for inflation.

For 2014, the standard deduction for taxpayers younger than 65

Standard deductions for older, visually impaired taxpayers

For 2014, the standard deduction for taxpayers older than 65 and/or visually impaired

$16,000

For standard deduction amount purposes, if your 65th birthday was Jan. 1, the IRS considers you age 65 for the previous tax year and you may claim the larger standard deduction.

As for vision considerations, 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 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 $1,000 or his or her earned income plus $350. This deduction amount, however, cannot exceed the basic standard deductions for the dependent taxpayer's filing status.

Itemized deductions

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.

You must file Form 1040 and Schedule A to itemize.

Some itemized deductions are limited based on a taxpayer's adjusted gross income, or AGI. Others are restricted to a threshold, or percentage, of the filer's adjusted gross income.

Taxpayers who make a certain amount also may not be able to deduct all of their itemized deductions. The total of Schedule A deductions begins phasing out if your adjusted gross income is more than $152,525 if married filing separately; $254,200 if single; $279,650 if head of household; or $305,050 if married filing jointly or a qualifying widow(er).

Source: www.bankrate.com

Category: Taxes

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