Is Your Standard Deduction Higher Than Usual?

If you noticed that your standard deduction is higher than normal this year, it could be the result of new tax laws that allow those who don’t itemize their deductions to include two additional deductions with their otherwise allowable standard deduction; (1) a portion of their state and local real property taxes and (2) casualty losses as a result of a Presidentially-declared disaster in their standard deduction amount for the year.  

Property Tax Add-On – This standard deduction add-on is for state and local real estate taxes for which the taxpayer is liable and paid during the year, up to a maximum of $500 for single filers and $1,000 for joint filers.  This deduction is available for both the 2008 and 2009 tax years.

Example – Real property tax addition to standard deduction: A single taxpayer, age 68, paid $1,800 in real property taxes on her personal residence in 2008.  She has no other deductions that could be itemized.  Her 2008 standard deduction will be $7,300 ($5,450 1,350 $500).

Disaster Loss Deduction Add-On – Special rules apply to losses which occur in areas the President of the United States declares eligible for Federal disaster assistance.   For 2008 and 2009, individuals can elect to add their disaster loss to their standard deduction for the year.  This provision is beneficial to taxpayers with net disaster losses whose other itemized deductions are less than their standard deduction.

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