Table of Contents
Most taxpayers have a choice of taking a standard deduction or itemizing their deductions. You benefit from the standard deduction if your standard deduction is more than the total of your allowable itemized deductions. If you have a choice, you should use the method that gives you the lower tax.
The standard deduction amount depends on your filing status, whether you are 65 or older or blind, whether an exemption can be claimed for you by another taxpayer, whether you pay state or local real estate taxes, and whether you have a net disaster loss from a federally declared disaster. Generally, the standard deduction amounts are adjusted each year for inflation. Use Worksheet 4-1 to figure your standard deduction amount.
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You are married and filing a separate return, and your spouse itemizes deductions,
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You are filing a tax return for a short tax year because of a change in your annual accounting period, or
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You are a nonresident or dual-status alien during the year. You are considered a dual-status alien if you were both a nonresident alien and a resident alien during the year.
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You cannot see better than 20/200 in the better eye with glasses or contact lenses, or
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Your field of vision is not more than 20 degrees.
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You file a joint return, or
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You file a separate return and can claim an exemption for your spouse because your spouse had no gross income and an exemption for your spouse could not be claimed by another taxpayer.
Example 1.
Bill and Lisa are filing a joint return for 2008. Both are over age 65. Neither is blind, and neither can be claimed as a dependent. They did not pay real estate taxes or have a net disaster loss. They do not itemize deductions, so they use Worksheet 4-1. Because they are married filing jointly, they enter $10,900 on line 1. They check the “No” box on line 2, so they also enter $10,900 on line 4. Because they are both over age 65, they enter $2,100 ($1,050 × 2) on line 5. They enter $13,000 ($10,900 + $2,100) on line 10, so their standard deduction is $13,000.
Example 2.
The facts are the same as in Example 1 except that Bill and Lisa paid $3,000 in local real estate taxes on their home in 2008, so they enter $3,000 on line 7 of the worksheet. They then enter $1,000 on lines 8 and 9 and $14,000 ($10,900 + $2,100 + $1,000) on line 10. Their standard deduction is $14,000.
Example 3.
The facts are the same as in Example 2 except that Bill and Lisa had a net disaster loss from a federally declared disaster of $8,000. That is the amount on line 18a of their Form 4684. They enter $8,000 on line 6 of Worksheet 4-1. On line 10 of the worksheet, they enter $22,000 ($10,900 + $2,100 + $8,000 + $1,000), which is their standard deduction.
The standard deduction for an individual for whom an exemption can be claimed on another person's tax return is generally limited to the greater of:
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$900, or
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The individual's earned income for the year plus $300 (but not more than the regular standard deduction amount, generally $5,450).
However, the standard deduction may be higher if the individual is 65 or older or blind, paid state or local real estate taxes, or had a net disaster loss from a federally declared disaster.
If an exemption for you (or your spouse if you are filing jointly) can be claimed on someone else's return, use Worksheet 4-1 to determine your standard deduction.
Caution. If you are married filing a separate return and your spouse itemizes deductions, or if you are a dual-status alien, do not complete this worksheet. You cannot take the standard deduction even if you were born before January 2, 1944, are blind, pay real estate taxes, or have a net disaster loss. | |||||||
If you were born before January 2, 1944, and/or blind, check the correct number of boxes below. Put the total number of boxes checked in box c and go to line 1. | |||||||
a. | You | Born before January 2, 1944 |
Blind | ||||
b. | Your spouse, if claiming spouse's exemption |
Born before January 2, 1944 |
Blind | ||||
c. | Total boxes checked | ||||||
1. | Enter the amount shown below for your filing status. | ||||||
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1. | ||||||
2. | Can you (or your spouse if filing jointly) be claimed as a dependent? No. Skip line 3; enter the amount from line 1 on line 4. Yes. Go to line 3. |
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3. | Is your earned income* more than $600? | ||||||
Yes. Add $300 to your earned income. Enter the total | 3. | ||||||
No. Enter $900 | |||||||
4. | Enter the smaller of line 1 or line 3 | 4. | |||||
5. | If born before January 2, 1944, or blind, multiply the number in box c by $1,050 ($1,350 if single or head of household). Enter the result here. Otherwise, enter -0- | 5. | |||||
6. | Enter any net disaster loss from Form 4684, line 18a. If more than zero, check the box on Form 1040, line 39c.** | 6. | |||||
7. | Enter the state and local real estate taxes you paid that would be deductible on Schedule A (Form 1040), line 6, if you were itemizing your deductions. See the instructions for Schedule A (Form 1040), line 6. Do not include foreign real estate taxes | 7. | |||||
8. | Enter $500 ($1,000 if married filing jointly) | 8. | |||||
9. | Enter the smaller of line 7 or line 8. If more than zero, check the box on Form 1040, line 39c (or Form 1040A, line 23c**) | 9. | |||||
10. | Add lines 4, 5, 6, and 9. This is your standard deduction for 2008.** | 10. | |||||
* Earned incomeincludes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It
also includes any amount received as a scholarship that you must include in your income. Generally, your earned income is
the total of the amount(s) you reported on Form 1040, lines 7, 12, and 18, minus the amount, if any, on line 27 (or the amount
you reported on Form 1040A, line 7). **If the amount on line 6 of this worksheet is more than zero, you cannot file Form 1040A; you must file Form 1040. |
Some individuals should itemize their deductions because it will save them money. Others should itemize because they do not qualify for the standard deduction. See the discussion under Standard Deduction, earlier, to decide if it would be to your advantage to itemize deductions.
Medical and dental expenses, some taxes, certain interest expenses, charitable contributions, casualty and theft losses, and certain other miscellaneous expenses may be itemized as deductions on Schedule A (Form 1040 or Form 1040NR).
You may be subject to a limit on some of your itemized deductions if your adjusted gross income (AGI) is more than $159,950 ($79,975 if you file married filing separately).You may benefit from itemizing your deductions on Schedule A (Form 1040 or Form 1040NR) if you:
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Cannot take the standard deduction,
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Had uninsured medical or dental expenses that are more than 7.5% of your adjusted gross income (see Medical and Dental Expenses, next),
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Paid interest (including mortgage insurance premiums) and taxes on your home,
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Had large unreimbursed employee business expenses or other miscellaneous deductions,
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Had large uninsured casualty or theft losses,
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Made large contributions to qualified charities (see Publication 526, Charitable Contributions), or
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Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled.
See the Schedule A (Form 1040 or Form 1040NR) instructions for more information.
You can deduct certain medical and dental expenses you paid for yourself, your spouse, and your dependents, if you itemize your deductions on Schedule A (Form 1040).
Table 4-1 shows items that you can or cannot include in figuring your medical expense deduction. For more information, see the following discussions of selected items, which are presented in alphabetical order. More information can also be found in Publication 502, Medical and Dental Expenses.
You can deduct only the amount of your medical and dental expenses that is more than 7.5% of your adjusted gross income shown on Form 1040, line 38.You can include in medical expenses amounts you pay for home improvements if their main purpose is medical care for you, your spouse, or your dependent.
Only reasonable costs to accommodate a home to your disabled condition (or that of your spouse or your dependents who live with you) are considered medical care. Additional costs for personal motives, such as for architectural or aesthetic reasons, are not medical expenses. Publication 502 contains additional information and examples, including a capital expense worksheet, to assist you in figuring the amount of the capital expense that you can include in your medical expenses. Also, see Publication 502 for information about deductible operating and upkeep expenses related to such capital expense items, and for information about improvements, for medical reasons, to property rented by a person with disabilities.
You cannot include in medical expenses the cost of household help, even if such help is recommended by a doctor. This is a personal expense that is not deductible. However, you may be able to include certain expenses paid to a person providing nursing-type services. For more information, see Nursing Services, later. Also, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. For more information, see Qualified long-term care services under Long-Term Care, later.
You can include in medical expenses amounts you pay for the cost of inpatient care at a hospital or similar institution if a principal reason for being there is to receive medical care. This includes amounts paid for meals and lodging. Also, see Meals and Lodging, later.
You can include in medical expenses amounts paid for qualified long-term care services and premiums paid for qualified long-term care insurance contracts.
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Required by a chronically ill individual, and
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Provided pursuant to a plan of care prescribed by a licensed health care practitioner.
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He or she is unable to perform at least two activities of daily living without substantial assistance from another individual for at least 90 days, due to a loss of functional capacity. Activities of daily living are eating, toileting, transferring, bathing, dressing, and continence.
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He or she requires substantial supervision to be protected from threats to health and safety due to severe cognitive impairment.
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Be guaranteed renewable,
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Not provide for a cash surrender value or other money that can be paid, assigned, pledged, or borrowed,
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Provide that refunds, other than refunds on the death of the insured or complete surrender or cancellation of the contract, and dividends under the contract must be used only to reduce future premiums or increase future benefits, and
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Generally not pay or reimburse expenses incurred for services or items that would be reimbursed under Medicare, except where Medicare is a secondary payer, or the contract makes per diem or other periodic payments without regard to expenses.
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Qualified long-term care premiums up to the amounts shown below.
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Age 40 or under – $310.
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Age 41 to 50 – $580.
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Age 51 to 60 – $1,150.
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Age 61 to 70 – $3,080.
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Age 71 or over – $3,850.
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Unreimbursed expenses for qualified long-term care services.
You can include in medical expenses the cost of meals and lodging at a hospital or similar institution if your main reason for being there is to receive medical care.
You may be able to include in medical expenses the cost of lodging (but not meals) not provided in a hospital or similar institution. You can include the cost of such lodging while away from home if all of the following requirements are met.
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The lodging is primarily for, and essential to, medical care.
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The medical care is provided by a doctor in a licensed hospital or in a medical care facility related to, or the equivalent of, a licensed hospital.
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The lodging is not lavish or extravagant under the circumstances.
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There is no significant element of personal pleasure, recreation, or vacation in the travel away from home.
The amount you include in medical expenses for lodging cannot be more than $50 per night for each person. You can include lodging for a person traveling with the person receiving the medical care. For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. (Meals are not included.)
Table 4-1. Medical and Dental Expenses Checklist
You can include: | You cannot include: | ||
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You can include in medical expenses insurance premiums you pay for policies that cover medical care. Policies can provide payment for:
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Hospitalization, surgical fees, X-rays, etc.,
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Prescription drugs,
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Replacement of lost or damaged contact lenses,
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Qualified long-term care insurance contracts (subject to the additional limits included in the discussion on qualified long-term care insurance contracts under Long-Term Care, earlier), or
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Membership in an association that gives cooperative or so-called “free-choice” medical service, or group hospitalization and clinical care.
If you have a policy that provides more than one kind of payment, you can include the premiums for the medical care part of the policy if the charge for the medical part is reasonable. The cost of the medical portion must be separately stated in the insurance contract or given to you in a separate statement.
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Payable in equal yearly installments, or more often, and
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Payable for at least 10 years, or until you reach age 65 (but not for less than 5 years).
You can include in medical expenses amounts you pay for prescribed medicines and drugs. A prescribed drug is one that requires a prescription by a doctor for its use by an individual. You can also include amounts you pay for insulin. Except for insulin, you cannot include in medical expenses amounts you pay for a drug that is not prescribed.
You can include in medical expenses wages and other amounts you pay for nursing services. The services need not be performed by a nurse as long as the services are of a kind generally performed by a nurse. This includes services connected with caring for the patient's condition, such as giving medication or changing dressings, as well as bathing and grooming the patient. These services can be provided in your home or another care facility.
Generally, only the amount spent for nursing services is a medical expense. If the attendant also provides personal and household services, amounts paid to the attendant must be divided between the time spent performing household and personal services and the time spent for nursing services. However, certain maintenance or personal care services provided for qualified long-term care can be included in medical expenses. See Maintenance and personal care services under Qualified long-term care services, earlier. Additionally, certain expenses for household services or for the care of a qualifying individual incurred to allow you to work may qualify for the child and dependent care credit. See Child and Dependent Care Credit, later, and Publication 503, Child and Dependent Care Expenses.
You can also include in medical expenses part of the amount you pay for that attendant's meals. Divide the food expense among the household members to find the cost of the attendant's food. Then divide that cost in the same manner as in the preceding paragraph. If you had to pay additional amounts for household upkeep because of the attendant, you can include the extra amounts with your medical expenses. This includes extra rent or utilities you pay because you moved to a larger apartment to provide space for the attendant.
You can include in medical expenses amounts paid for transportation primarily for, and essential to, medical care.
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19 cents per mile for the period January 1 through June 30, 2008, and
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27 cents per mile for the period July 1 through December 31, 2008
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