Reduce Your Taxes Significantly With Standard Tax Deduction

The standard tax deduction option can be considered as a safety regulator, reducing the amount you are taxed for to a flat sum. Nevertheless, keep your options open as there are some alternatives which may better suit you. You can make a choice between standard tax deduction or itemised deduction. The last one is made possible for matters related to medical costs, mortgage interest, charitable payments, etc. Under the federal law you can only benefit from one of the two tax deductions.

Also, bear in mind that the deduction segments are usually modified yearly in order for the tax benefit to keep in track with inflation. On the other hand, the actual deduction varies according to your filing status.

Consequently, the standard deduction given to the head of a household was $7,150, to a single individual in 2004 was $4,850; for a married couple filing a joint return it was $9,700; for a married couple filing separate returns it was $4,850 and for a widower with a dependent child it was $9,500.

Under the law, tax payers who are beyond the age of 65, or who are blind, receive a higher deduction. If your spouse is beyond 65 years of age or blind, you can also claim this separate benefit.

Conversely, the deduction is diminished for those who appear in someone else’s deductions. For students, remember that scholarships and grants are considered income. So bear it in mind when asking for deductions.

Those who are married but whose spouse itemizes deductions cannot receive the benefit. The same applies to those who file a tax return for a short tax year because of a change in their annual accounting period; and those whose status is that of a non-resident or dual-status alien. Nevertheless, if you are a married to a U.S. citizen and choose to be treated as a US resident, despite being a non-resident alien then you can benefit from the standard deduction.

When you decide to file your tax returns, remember the standard deduction you could be entitled to. It could altogether be a better alternative to the itemized option.

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