What is a "standard deduction" and how much is it?

What is a "standard deduction" and how much is it?

Steve Duben, CPA (Partner, Duben & Natividad) gives expert video advice on: What is a "deduction"?; What is a "standard deduction" and how much is it?; What is an "itemized deduction"? and more...

When we talk about deductions, there's something called a "standard deduction" that comes up. When you're looking at your tax return, on the second page of the 1040 - or even on the 1040EZ or the 1040A - there's a standard deduction. This is where the IRS or congress has built into our tax law a standard deduction. If you don't have enough to itemize your deductions - you don't have any medical expenses, own a home, have any interest and taxes on the home, give a lot of money to charities - the standard deduction as a single person for 2006 is $5,150. You get a standard deduction off your income of $5,150. If you're a married couple, double that standard deduction to $10,300. That number gets increased every year. It's indexed based on the cost of living, or whatever congress comes up with, but it goes up each year a little bit.