2007 Standard Tax Deduction
The standard tax deduction varies depending on the taxpayers filing status. The 2007 Standard Tax Deduction is $5,150 for a single tax payer.
The decision to take the standard tax deduction rather than itemize deductions is one of the most important decisions made by the tax payer each filing season. The decision is normally fairly simple. It normally makes more sense to take the one which gives the higher total deductions. Since the 2007 standard tax deduction is $5,150 for a single tax payer, he must determine if the total of his itemized deductions exceeds this amount.
A great many tax payers use the standard deduction. There are two reasons for this. First, it is in the best interest of the government and the IRS to have you use the standard deduction. Since the standard deduction is not itemized, there is no need to audit it. The more people that use it, the less checking the IRS has to do on the validity of tax returns. Therefore, although many people may disagree, the IRS is fairly generous with the amount of the standard deduction. There are many tax payers who benefit from it because the total of their itemized deductions would not come close to it.
A second reason is that it is so much easier; requires much less record keeping; and is really not subject to audit. Many taxpayers might decide that these advantages are worth more than a small savings in tax liability. Still, it is always a good idea to calculate your itemized deductions and keep good financial records that allow you to do this. There is no reason to pay more tax than you actually owe.
The standard deduction varies according to filing status. In 2007, the deduction is $5,150 for a single tax payer. Some one filing as Head of Household is entitled to a standard deduction of $7,850. Married filing jointly can claim $10,300 ($5,150 for each party). Also a qualified widow(er) with a dependent child can also claim $10,300. A person over 65 adds $1050, as does a person who is blind.
Dependents can take between $850 and the maximum of $5,150. The actual figure must be calculated on the appropriate IRS work sheet. Also, in the case of married couples filing separately, each must either itemize or each must take the standard deduction. The standard deduction is actually fairly generous to many tax payers who have few deductions that can be itemized, but it is the tax payer’s responsibility to determine which method is best for them.