estate planning

Standard Deduction

Line 40 is a significant line item for most taxpayers – whether a taxpayer chooses to claim the standard deduction or to itemize his/her deductions, Line 40 often provides the largest tax deduction of any Form 1040 line item. As a result, taxpayers must be aware of the benefits of each option and know which factors to consider in selecting a deduction method. Generally speaking, one’s federal income tax will be less by taking the larger of the standard deduction or total itemized deductions.

All taxpayers are given the opportunity to claim the standard deduction (as opposed to itemizing) – a fixed dollar amount reduction in adjusted gross income (Line 37). For 2012, the fixed dollar amount is as follows:

-Single: $5,950
-Married Filing Separately: $5,950
-Married Filing Jointly: $11,900
-Qualifying Widow(er): $11,900
-Head of Household: $8,700

There are, however, two alternative situations where taxpayers must calculate their standard deduction using a special chart. First, when a taxpayer, and/or a spouse if filing jointly, can be claimed as a dependent on someone else’s current year return, that person must use the Standard Deduction Worksheet for Dependents (See Page 40) to determine the deduction dollar amount. Second, when a taxpayer checks any box on Line 39a (indicating that he/she and/or a spouse were either blind or born before January 2, 1948), that person must use the Standard Deduction Chart for People who Were Born Before January 2, 1948 or Were Blind (See Page 40).

NOTE: A taxpayer’s standard deduction is reduced to $0 if he/she checks the box on Line 39b (indicating that a spouse has chosen to either itemize his/her own deductions on a separate return or the taxpayer is a dual-status alien). This is true even if the taxpayer and/or spouse were born before January 2, 1948 or were blind.

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