FY 2006 Tax News - Standard Deduction Amount Increased

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The standard deduction is a dollar amount that reduces the amount of income on which you are taxed.

Note: You cannot take the standard deduction if you claim itemized deductions.

In general, the basic standard deduction is an amount relative to each tax year and varies according to your filing status.

The standard deduction for taxpayers who do not itemize deductions on Schedule A of Form 1040 is, in most cases, higher for 2006 than it was for 2005.

The 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.

The basic standard deduction amounts for 2006 are:

Head of household â€” $7,550
Married taxpayers filing jointly and qualifying widow(er)s â€” $10,300
Married taxpayers filing separately â€” $5,150
Single â€” $5,150

The standard deduction amount for an individual who may be claimed as a dependent by another taxpayer may not exceed the greater of $850 or the sum of $300 and the individual’s earned income.

For more information, refer to IRS Publication 501, Exemptions, Standard Deduction, and Filing Information, which you can find at http://www.irs.gov/publications/p501/index.html.

You can find more tax informationat www.taxassistonline.com

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