Most taxpayers have a choice of taking a standard deduction or itemizing their deductions. You benefit from the standard deduction if your standard deduction is more than the total of your allowable itemized deductions. If you have a choice, you should use the method that gives you the lower tax.

The standard deduction amount depends on your filing status, whether you are 65 or older or blind, whether an exemption can be claimed for you by another taxpayer, whether you paid state or local sales or excise tax (or certain other taxes or fees in a state without a sales tax) in 2010 on the purchase of a new motor vehicle after February 16, 2009, and before 2010 and whether you have a net disaster loss from a federally declared disaster. Generally, the standard deduction amounts are adjusted each year for inflation. In most cases, you can use Worksheet 4-1 to figure your standard deduction amount.

Your standard deduction is zero and you should itemize any deductions you have if:

• You are married and filing a separate return, and your spouse itemizes deductions on his or her return,
• You are filing a tax return for a short tax year because of a change in your annual accounting period, or
• You are a nonresident or dual-status alien during the year. You are considered a dual-status alien if you were both a nonresident alien and a resident alien during the year.

If you are a nonresident alien who is married to a U.S. citizen or resident alien at the end of the year, you can choose to be treated as a U.S. resident. See Publication 519, U.S. Tax Guide for Aliens. If you make this choice, you can take the standard deduction.

The amount of the standard deduction for a decedent's final tax return is the same as it would have been had the decedent continued to live. However, if the decedent was not 65 or older at the time of death, the higher standard deduction for age cannot be claimed.

If you do not itemize deductions, you are entitled to a higher standard deduction if you are age 65 or older at the end of the year. You are considered age 65 on the day before your 65th birthday. Therefore, you can take a higher standard deduction for 2010 if you were born before January 2, 1946.

If you are blind on the last day of the year and you do not itemize deductions, you are entitled to a higher standard deduction. You qualify for this benefit if you are totally or partly blind.

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.

If your eye condition will never improve beyond these limits, the statement should include this fact. You must keep the statement in your records.

If your vision can be corrected beyond these limits only by contact lenses that you can wear only briefly because of pain, infection, or ulcers, you can take the higher standard deduction for blindness if you otherwise qualify.

You can take the higher standard deduction if your spouse is age 65 or older or blind and:

• 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.

Your standard deduction is increased by any state or local sales or excise taxes you paid in 2010 on the purchase of a new vehicle after February 16, 2009, and before 2010. If you bought the vehicle in 2010, you cannot increase your standard deduction by any taxes you paid on the purchase. The amount is limited to tax on the first $49,500 of the purchase price. The taxes must be state or local sales or excise taxes that would be deductible on Form 1040 (Schedule A) if you were itemizing your deductions. In states without a sales tax, certain other taxes or fees qualify if they are assessed on the purchase of the vehicle and are based on the vehicle's sales price or as a per unit fee. Taxes deductible in arriving at adjusted gross income, such as taxes on a vehicle used in your business, cannot be used to increase your standard deduction. If you are increasing your standard deduction by the amount of these state or local sales or excise taxes, complete Schedule L (Form 1040A or 1040) and attach it to your return.

Your standard deduction is increased by any net disaster loss you had in 2010 because of a disaster that occurred before 2010 and was declared a federal disaster after 2007. This amount is on Form 4684, line 17.

If you are increasing your standard deduction by the amount of your net disaster loss, be sure to complete Schedule L (Form 1040A or 1040) and attach it to your return.

The following example illustrates how to determine your standard deduction using Worksheet 4-1.

Bill and Lisa are filing a joint return for 2010. Both are over age 65. Neither is blind, and neither can be claimed as a dependent. They did not pay sales or excise taxes on the purchase of a new motor vehicle or have a net disaster loss. They do not itemize deductions, so they use Worksheet 4-1. Because they are married filing jointly, they enter $11,400 on line 1. They check the "No" box on line 2, so they also enter $11,400 on line 4. Because they are both over age 65, they enter $2,200 ($1,100 × 2) on line 5. They enter $13,600 ($11,400 + $2,200) on line 7, so their standard deduction is $13,600.

The standard deduction for an individual for whom an exemption can be claimed on another person's tax return is generally limited to the greater of:

• $950, or
• The individual's earned income for the year plus $300 (but not more than the regular standard deduction amount, generally $5,700).

However, the standard deduction may be higher if the individual is 65 or older or blind, paid state or local sales taxes or excise taxes or taxes on the purchase of a new motor vehicle, or had a net disaster loss from a federally declared disaster.

If an exemption for you (or your spouse if you are filing jointly) can be claimed on someone else's return, use Worksheet 4-1, if applicable, to determine your standard deduction.

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Worksheet 4-1. 2010 Standard Deduction Worksheet Caution. If your filing status is married filing separate and your spouse itemizes deductions on his or her return, or if you are a dual-status alien, do not complete this worksheet. You cannot take the standard deduction even if you were born before January 2, 1946, are blind, had a net disaster loss, or paid state or local sales or excise tax on the purchase of a new motor vehicle. If you paid state or local sales or excise tax in 2010 on the purchase of a new motor vehicle after February 16, 2009, and before 2010, you cannot use this worksheet to figure your standard deduction. You must use Schedule L (Form 1040A or 1040) and attach it to your return. If you are filing Form 1040EZ, do not use this worksheet. Instead, see line 5 of Form 1040EZ. If you were born before January 2, 1946, and/or blind, check the correct number of boxes below. Put the total number of boxes checked in box c and go to line 1. a. You   Born before January 2, 1946      Blind  b. Your spouse, if claiming spouse's exemption   Born before January 2, 1946      Blind   c. Total boxes checked              1. Enter the amount shown below for your filing status.               Single or married filing separately — $5,700 Married filing jointly or Qualifying widow(er) — $11,400 Head of household — $8,400    1.         2. Can you (or your spouse if filing jointly) be claimed as a dependent on someone else's return? No. Skip line 3; enter the amount from line 1 on line 4, and go to line 5. Yes. Go to line 3.         3. Is your earned income* more than $650?               Yes. Add $300 to your earned income. Enter the total  3.       No. Enter $950             4. Enter the smaller of line 1 or line 3  4. 5. If born before January 2, 1946, or blind, multiply the number in box c by $1,100 ($1,400 if single or head of household). Enter the result here. Otherwise, enter -0-  5. 6. Enter any net disaster loss from Form 4684, line 17** 6. 7. Add lines 4, 5, and 6. This is your standard deduction for 2010.  7. * Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. It also includes any amount received as a scholarship that you must include in your income. Generally, your earned income is the total of the amount(s) you reported on Form 1040, lines 7, 12, and 18, minus the amount, if any, on line 27 (or the amount you reported on Form 1040A, line 7). **If the amount on line 6 of this worksheet is more than zero, you must complete Schedule L (Form 1040A or 1040) and attach it to your return. Also, if the amount on line 6 of this worksheet is more than zero, you cannot file Form 1040A, you must file Form 1040.