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When:
January 01, 2004
Who it Affects:
All taxpayers.
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2004 Tax Law Changes
Standard deduction goes up
Every year, the Internal Revenue Service adjusts the standard deduction to account for inflation. This is the basic deduction all taxpayers get. But don't just take the standard deduction. Total up all your deductions every year. If the total of your itemized deductions exceeds the standard deduction, then, by all means, itemize. It will save you money. If your deductions don't exceed the standard deduction, then don't itemize.
For 2004, the standard deduction is:
| 2004 Standard Deductions | | Filling status | Amount | | Married filling jointly or qualifying widow(er) | $9,700 | | Heads of Household | $7,150 | | Singles | $4,850 | | Married filling separately | $4,850 |
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Additional standard deductions
If you're 65 or blind: An additional $950 standard deduction may be claimed by a married taxpayer who is at least 65 years old or blind. If the taxpayer is single, the additional standard deduction amount is $1,200.
If you're 65 AND blind: A married taxpayer can claim a second $950 standard deduction -- for a total of $1,900. If the taxpayer is single, he can claim a second $1,200 standard deduction -- for a total of $2,400.
2005 standard deduction changes
In 2005, the standard deduction rises to:
| 2005 Standard Deductions | | Filling status | Amount | | Married filling jointly or qualifying widow(er) | $10,000 | | Heads of Household | $7,300 | | Singles | $5,000 | | Married filling separately | $5,000 |
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If you're 65 or blind: An additional $1,000 standard deduction may be claimed by a married taxpayer who is at least 65 years old or blind. If the taxpayer is single, the additional standard deduction amount is $1,250.
If you're 65 AND blind: A married taxpayer can claim a second $1,000 standard deduction -- for a total of $2,000. If the taxpayer is single, he can claim a second $1,250 standard deduction -- for a total of $2,500.
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