This chapter discusses the following topics.

• How to figure the amount of your standard deduction.
• The standard deduction for dependents.
• Who should itemize deductions.

Most taxpayers have a choice of either taking a standard deduction or itemizing their deductions. If you have a choice, you can use the method that gives you the lower tax.

The standard deduction is a dollar amount that reduces your taxable income. It is a benefit that eliminates the need for many taxpayers to itemize actual deductions, such as medical expenses, charitable contributions, and taxes, on Schedule A (Form 1040). The standard deduction is higher for taxpayers who:

• Are 65 or older, or
• Are blind.

Your standard deduction is zero and you should itemize any deductions you have if:

• Your filing status is married filing separately, and your spouse itemizes deductions on his or her return,
• You are filing a tax return for a short tax year because of a change in your annual accounting period, or
• You are a nonresident or dual-status alien during the year. You are considered a dual-status alien if you were both a nonresident and resident alien during the year.Note. If you are a nonresident alien who is married to a U.S. citizen or resident alien at the end of the year, you can choose to be treated as a U.S. resident. (See Publication 519, U.S. Tax Guide for Aliens.) If you make this choice, you can take the standard deduction.
  

The standard deduction amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer. Generally, the standard deduction amounts are adjusted each year for inflation. The standard deduction amounts for most people are shown in Table 20-1.

The standard deduction for a decedent's final tax return is the same as it would have been had the decedent continued to live. However, if the decedent was not 65 or older at the time of death, the higher standard deduction for age cannot be claimed.

If you are age 65 or older on the last day of the year and do not itemize deductions, you are entitled to a higher standard deduction. You are considered 65 on the day before your 65th birthday. Therefore, you can take a higher standard deduction for 2012 if you were born before January 2, 1948.

Use Table 20-2 to figure the standard deduction amount.

If you are blind on the last day of the year and you do not itemize deductions, you are entitled to a higher standard deduction.

If you are not totally blind, you must get a certified statement from an eye doctor (ophthalmologist or optometrist) that:

• You cannot see better than 20/200 in the better eye with glasses or contact lenses, or
• Your field of vision is 20 degrees or less.

If your eye condition is not likely to improve beyond these limits, the statement should include this fact. You must keep the statement in your records.

If your vision can be corrected beyond these limits only by contact lenses that you can wear only briefly because of pain, infection, or ulcers, you can take the higher standard deduction for blindness if you otherwise qualify.

You can take the higher standard deduction if your spouse is age 65 or older or blind and:

• You file a joint return, or
• You file a separate return and can claim an exemption for your spouse because your spouse had no gross income and cannot be claimed as a dependent by another taxpayer.

The following examples illustrate how to determine your standard deduction using Tables 20-1 and 20-2.

Larry, 46, and Donna, 33, are filing a joint return for 2012. Neither is blind, and neither can be claimed as a dependent. They decide not to itemize their deductions. They use Table 20-1. Their standard deduction is $11,900.

The facts are the same as in Example 1 except that Larry is blind at the end of 2012. Larry and Donna use Table 20-2. Their standard deduction is $13,050.

Bill and Lisa are filing a joint return for 2012. Both are over age 65. Neither is blind, and neither can be claimed as a dependent. If they do not itemize deductions, they use Table 20-2. Their standard deduction is $14,200.