First you have to determine your standard deduction based on your filing status. For 2010, they are:
- Single $5,700
- Married Filing Jointly $11,400
- Head of Household $8,400
- Married Filing Separately $5,700
- Qualifying Widow(er) $11,400
- Note: If the taxpayer is 65 or older, totally or partially blind, or their exemption can be claimed by another taxpayer, you must use the Standard Deduction Worksheet.
If you are partly blind, you must get a certified statement from an eye doctor or registered optometrist that:
- You cannot see better than 20/200 in the better eye with glasses or contact lenses, or
- Your field of vision is not more than 20 degrees.
- Can only be claimed on Form 1040
- If a married taxpayer files a separate return and spouse itemizes deductions the standard deduction is zero and the taxpayer should itemize any deductions he/she has.
- Nonresident or dual-status aliens must itemize their deductions.
- Starting in 2010, itemized deductions are no longer limited because of your adjusted gross income.
Other itemized deductions include:
- Large medical and dental expenses (limited to those that exceed 7½% of your AGI for the year). Note: the 7½% increases to 10% in 2013 (2017 for seniors)
- State and Local Income or General Sales Taxes - These include state and local income taxes, property taxes on real estate, intangible taxes (on the value of stocks and bonds you own) and on personal property taxes on such things as cars
- Charitable contributions are generally limited to 50% of your AGI, but in certain circumstances the limit can be as little as 20% or 30% of AGI
- Miscellaneous employee business expenses and investment expenses, but only to the extent that they exceed 2% of your AGI
- Casualty losses in excess of 10% of $100 per occurrence plus your AGI, and
- Gambling Losses up to the amount of winnings; Hobby expenses up to the amount of earnings