Standard Deduction

• The standard deduction is a simple way for taxpayers to take a deduction rather than totaling the various expenses that qualify as itemized deductions. According to H&R Block, most taxpayers take this deduction. For 2009 the deduction is $5,700 for single filers and those who are married but file separate returns, $8,350 for heads of households and $10,400 for married couples who file together. If you take the standard deduction you are ineligible to claim additional itemized deductions.
  
  

Itemized Deductions

• If you have significant expenses in the itemized deductions category and your total exceeds the amount of the standard deduction, you can use the itemized total instead to decrease the amount of tax you owe. Several common itemized deductions include medical care, mortgage interest, mileage and charitable contributions. Only medical expenses that exceed 7.5% of your adjusted gross income are deductible. Mileage is deductible at different rates depending on what the purpose of the drive was. For 2009, business miles are deductible at the rate of $0.55 per mile, medical and moving miles at the rate of $0.24 per mile and miles driven for charity at the rate of $0.14 per mile. Charitable contributions can be deducted as long as they are made to a qualifying organization like a non-profit school or hospital, or a religious institution.
  
  

Above the Line Deductions

• Above the line deductions are deductions that can be taken regardless of whether or not you elect to take the standard deduction. These deductions include student loan interest, qualified educational expenses, alimony and contributions to traditional IRAs and 401k plans. For 2009, the contributions to traditional IRAs are limited to $5,000 for individuals younger than 50 years old and $6,000 for individuals over 50. For 401k plans, the limits are $16,500 for those under 50 and $22,000 for those older than 50. Qualified educational expenses include tuition and if you are attending at least half-time, room and board.