The Internal Revenue Service allows taxpayers to reduce their tax obligation by itemizing their deductions or by claiming the standard deduction. The amount of the standard deduction is based primarily on filing status and might fluctuate from year to year based on adjustments made for inflation. The standard deduction for a taxpayer who can be claimed as a dependent by another taxpayer is based on the amount of her earned income, unearned income and the combination of her earned and unearned income.
The standard deduction is typically based on your marital status as of the last day of the year. If you were single on Dec. 31, the IRS considers you to have been single for the entire year. If you were married as of Dec. 31, the IRS considers you to have been married for the entire year. Your standard deduction if you file as single or married filing separately was $5,700 for the 2010 tax year. The standard deduction for married filing jointly and qualifying widow(er) was $11,400. The standard deduction for the head of household filing status was $8,400.
The standard deduction can change significantly if you can be claimed as a dependent on another taxpayer's income tax return. There are two classes of people who may be claimed as dependents, including qualifying children and qualifying relatives. If you are under 19 years of age or under 24 years of age and a full-time student, you can likely be claimed as another taxpayer's dependent. If you are dependent on another taxpayer for more than half of your support and had a gross income of less than $3,650, you may be the other taxpayer's dependent. You are never your spouse's dependent.
Standard Deduction for Dependents
If you were single as of the last day of the year and can be claimed as a dependent on another taxpayer's income tax return, your standard deduction will be limited to the greater of $950 or your total earned income plus $300. Your standard deduction cannot exceed the regular standard deduction amount of $5,700 for the 2010 tax year.
If you were married as of the last day of the year but can still be claimed as a dependent on another taxpayer's income tax return, and you and your spouse filed a joint return, your standard deduction would be the total of your earned income, up to $11,400 for the 2010 tax year.
If you were married as of the last day of the year but can still be claimed as a dependent on another taxpayer's income tax return, you and your spouse filed separate returns, and your spouse itemized his deductions, your standard deduction was $0 for the 2010 tax year.
If you are another taxpayer's dependent and are blind or at least 65 years old, your standard deduction may be higher. If you paid excise taxes on a new car or if you had a loss from a federally declared disaster, you may have a higher standard deduction. Most taxpayers claim the standard deduction, but you are not required to do so. The IRS recommends figuring your federal income taxes using both the standard deduction method and the itemized deductions method, then filing your tax return using the method that requires you to pay the least taxes.
- Internal Revenue Service: Topic 551 - Standard Deduction
- Internal Revenue Service: Publication 501, Standard Deduction for Dependents
- Internal Revenue Service: Publication 929 Tax Rules for Children and Dependents
- Internal Revenue Service: Publication 501: Standard Deduction
- Internal Revenue Service: Publication 17, Standard Deduction Worksheet
- Internal Revenue Service: Publication 501, Exemptions for Dependents
Mike Parker is a full-time writer, publisher and independent businessman. His background includes a career as an investments broker with such NYSE member firms as Edward Jones & Company, AG Edwards & Sons and Dean Witter. He helped launch DiscoverCard as one of the company's first merchant sales reps.