While many married couples, particularly homeowners, itemize their qualified deductions, others prefer to "keep it simple" and use the IRS standard deduction amount. Choosing this options eliminate the requirement of keeping detailed records of deductible expenses, as the IRS does not "challenge" the validity of your deductions. When preparing your tax form -- 1040 -- you should calculate your estimated deductions to learn if they exceed the standard allowable amount.
Standard Deduction Amount May Change Yearly
The IRS publishes the married filing jointly standard deduction amount annually. In their effort to be fair, the IRS recalculates this amount based on inflationary data from the prior year. While it is possible for the joint tax return standard deduction to decrease, because of deflation, in most cases it remains the same or increases somewhat from prior year levels. Cost of living changes in standard deductions won't save you from the effects of a large income increase, but it might help mitigate the tax liability. Note: For tax year 2010, the standard deduction for joint filers -- $11,400 -- will not change from 2009. This is the first time it was not increased.
Some Taxpayers Ineligible for Standard Deduction
There are situations or people who may be prohibited from using the standard deduction. For example, if you decide to file separately, instead of jointly, and one spouse itemizes deductions, the other cannot use the standard deduction. They must also itemize deductions, even if they are under the standard deduction maximum. Also, nonresident aliens or "dual status" aliens are usually prohibited from using the standard deduction. There are some exceptions to this rule, so if you are a nonresident alien, consult a tax adviser.
Additional Standard Deductions
Along with the standard deduction, there are other automatic deductions you and/or your spouse can take if you qualify. For example, if one or both filers of you are 65 or over, an additional standard deduction is available. Should one or both of you be classified as "legally blind," you may take another deduction, to be added to your allowable filing jointly standard deduction.
Additions to Standard Deduction
At times, the IRS authorizes additional amounts that you can add to your standard deduction, but not always. For example, in tax year 2009, the standard deduction for married taxpayers filing jointly was $11,400. You could also add state and local real estate taxes you paid, up to $500, however, making your standard deduction now $11,900. Also, if you and your spouse had a net "disaster loss" from hurricane, flood or other natural disaster, you could add this net loss -- total minus insurance reimbursement -- to your standard deduction to further increase your tax savings. Further, if you paid local sales or excise tax on the purchase of an auto, this amount could also be added to your standard deduction. These rules change frequently, so check with your tax adviser for current opportunities.
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