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What Seniors Must Know Before Filing Their 2011 Tax Return (Part 5)

Filing Status, Itemized Deductions, Standard Deduction

For seniors, the Internal Revenue Service is divided into 2 parts:

(1) The Good IRS and

(2) The Bad IRS

The Bad IRS – that’s the one we are all familiar with – its job is to try to take as much money from you as it can.

The Good IRS – we don’t hear too much about them – its job is to save you as much money as it can.

This is the fifth in a series of articles about the Good IRS and information and resources it makes available to help seniors through the onerous task of filing their tax returns. In Part 4, we discovered how the IRS addresses the Eternal Question, “Do I need to file a tax return?” Part 5 begins the discussion of deductions of interest to seniors by focusing on the standard deduction for seniors.

Here again the Good IRS comes to the rescue with Publication 554 “Tax Guide for Seniors” http://www.irs.gov/publications/p554/ch01.html. Chapter 4 “Deductions” is specifically geared toward seniors with an explanation of the special additions to the standard deduction for seniors, when to take the standard deduction, what itemized deductions are generally available to seniors, and a detailed explanation of the medical expense deduction.

The IRS starts off Chapter 4 by stating that most taxpayers have a choice of taking the standard deduction or itemizing their deductions. Generally, you are going to take the standard deduction if it is more than the total of your itemized deductions. And the IRS adds, fairly, that if you have a choice, you should use the method that gives you the lower tax. However, please note that some persons are not eligible for the standard deduction. If you are married and filing a separate return and your spouse itemizes deductions; you are filing a return for a short tax year because of a change in your annual accounting period; or you are a nonresident or dual-status alien your standard deduction is zero and you should itemize any deductions you may have. (Please note that there are some special tax rules for aliens and, in some cases they may be eligible to be treated as a U.S. resident.)

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The Standard Deduction. The amount of the standard deduction depends on filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer. The standard deduction for each filing status for 2011 is:

  • Single or married filing separately – $5,800
  • Married filing jointly or Qualifying widow(er) – $11,600
  • Head of Household $8,500

Additions to Standard Deduction for Seniors. Generally, if you are 65 or older, the standard deduction is higher than for younger tax filers. The age cutoff for 2011 returns is January 2, 2011. The IRS considers you as turning 65 on the day before your 65th birthday. In addition to age, there is also an equal and additional amount that may be added to the standard deduction for blindness. For 2011 returns, this amount is $1,150 ($1,450 if single of head of household). Also, if your spouse is at least 65 or blind you can take the higher standard deduction if 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 an exemption for your spouse could not be claimed by another taxpayer. Please note that, if you can be claimed as a dependent on another’s return, the standard deduction is limited.

So that the basics of the Standard Deduction. Please see Chapter 4 of Publication 554 for the whole story.

Part 6 of “What Seniors Must Know Before Filing Their 2011 Tax Return” will further discuss Chapter 4 and deductions that are of particular interest to seniors. I will also cover other senior tax, housing, finance or other issues of general interest to seniors by request and can be reached at natsbaseball2@yahoo.com.