What Is the Federal Income Tax's Standard Deduction for a Self-Employed Single?

The federal income tax standard deduction for a single person in the United States is $5,700, as of the 2009 tax year. The standard deduction exempts that amount of your income from income tax. However, you may take a larger standard deduction under certain circumstances.

Misconception

The standard deduction is different from a personal exemption. Tax filers can usually claim a personal exemption for each person in their households, including themselves. If your adjusted gross income exceeds a certain amount, however, the amount of your personal exemption may be limited. Your standard deduction, on the other hand, is based on your tax filing status and certain types of income and taxes.

Factors

As of the 2009 tax year, the amount of your standard deduction increases if you reach age 65 on or before January 1 of the tax year in question, you are or become totally or partially blind during the tax year, you paid real estate taxes, you paid sales or excise taxes on a new motor vehicle or you experienced a net disaster loss from any federally declared disaster. If another person can claim you as a dependent, your standard deduction is limited to the greater of $950 or your earned income plus $300, but not more than the base-level standard deduction for that year. If you use taxes paid on a new motor vehicle to increase your standard deduction, the IRS requires you to submit Schedule L with your 1040 or 1040A.

Warning

As of the 2009 tax year, you are not eligible to take the standard deduction as a self-employed single person if you were a dual-status or nonresident alien during the year.

Expert Insight

Kay Bell of Bankrate.com advises, before taking the standard deduction, determine if your itemized deductions will be higher than your standard deduction. Itemized deductions are specific deductions you take based on specific expenses, rather than a preset amount. You can use tax form Schedule A to help you find out if itemizing gives you a larger deduction. If it does, you must include Schedule A with your 1040 or 1040A when you file. Eligible deductions may include medical expenses above 7.5 percent of your gross income, charitable donations, unreimbursed job expenses, mortgage interest, state and local taxes and many more categories.

Potential

The IRS generally raises the base amount of the standard deduction each year to compensate for inflation. You are not locked into the standard deduction if you choose it for one tax year; you may choose to itemize or not, depending on which allows you the greatest deduction.

References

• Internal Revenue Service: Publication 17 (2009) -- Your Federal Income Tax
• Bankrate.com: Standard or Itemized Tax Deduction?