Standard Deduction

Most taxpayers are permitted to deduct either a standard deduction or itemized deductions in determining their taxable income. The standard deductions are based on filing status. For 2008, the amounts are: Single and Married Taxpayers Filing Separately $5,450 Head of Household $8,000 Married Filing Jointly and Surviving Spouse $10,900 In addition, elderly and blind taxpayers are allowed an “add-on” to the standard deduction for their filing status. The add-on amount in 2008 for single taxpayers is $1,350 and $1,050 for married taxpayers. As an example, a married couple filing jointly and both over age 65 would have a standard deduction of $13,000 ($10,900+ $1,050 + $1,050). For 2008, the standard deduction of an individual who is, or could be, a dependent of someone else is limited to the greater of $900 or the individual’s earned income plus $300 (but not exceeding $5,450). Standard Mileage Rate – This is the per mile rate that can be used in lieu of actual expenses when using a vehicle for a deductible purpose. For 2008, the cents per mile rates are: 50.5 for business use, 19.0 for moving and medical use and 14.0 for charity. Parking expenses can be taken in addition to the standard mileage rate. Self-employed individuals can also add the business portion of the interest expense to acquire the vehicle. The standard rate can be used for up to four vehicles being used simultaneously.