Standard Deduction and Tax Computation

Deductions Reduces the amount of income that is taxed Most taxpayers have a choice of: Standard Deduction Itemizing Deductions Choose the option that results in LOWEST tax

Standard Deduction A predefined dollar amount that is based on the taxpayer’s filing status Increased if 65 or older and/or blind Decreased if taxpayer can be claimed as a dependent

Itemized Deductions If the total itemized deductions are greater than the standard deduction – lower taxable income (lower tax) Usually taxpayers itemize if they have: Mortgage interest Large unreimbursed medical/dental expenses Large charitable contributions Must itemize if married filing separately and one spouse itemizes

Age and Blindness Could be higher if taxpayer or spouse is over 65 and or blind Qualify as over 65 or older if 65 at end of the year Blindness Cannot see better than 20/200 in the better eye with glasses or contact lenses, or Field of vision is not more than 20 degrees If one spouse is blind or over 65 – can take the higher deduction

Dependents & Standard Deduction Standard deduction is generally lower for an individual who can be claimed as a dependent. See: Standard Deduction for Worksheet for dependents