Standard Tax Deduction – Learn How This Really Works!

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Standard Tax Deduction – Learn How This Really Works!

By: Nicky Pilkington

These are the deductions that you get as a part of your normal tax cut.

The standard tax deduction is a safety valve. It cuts your tax by a flat sum and in a direct way. Totally hassle free, unlike in itemized cuts where you have to go into greater detail of everything. The government allows you any one of the following.

The slabs are revised annually so as to keep them under the revised inflation costs.

Thus,
-the standard deduction available to a single individual in 2004 was $4,850;
-for the head of household it was $7,150;
-for a married couple filing a joint return it was $9,700;
-for a qualifying widow (err) with dependent child it was $9,500;
-and for a married couple filing separate returns it was $4,850.

People over the age of 65 or who are blind get higher deductions and also the spouses of such people.

If you are a part of somebody's deductions, then you can get a lesser relief. As a student, you can claim a deduction under grants as it is treated as an income.

The benefit is not available to those who are married but whose spouse itemizes deductions; those who file a tax return for a short tax year because of a change in their annual accounting period; and to those whose status is that of a non-resident or dual-status alien. A non-resident person married to a US citizen can claim these benefits if they choose to be treated alone.

The next time you file your returns, take a close look at the standard deduction you are entitled to. It could work better and simpler than the itemized approach. And could save you not only those dollars but also the time and effort too. After all there are many more things in life than too a dollar....