Standard Deduction Amount Increased

The standard deduction for most taxpayers who do not itemize deductions on Schedule A of Form 1040, U.S. Individual Income Tax Return, is higher for 1998 than it was for 1997. The amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer. The 1998 Standard Deduction Tables are shown in Publication 501, Exemptions, Standard Deduction, and Filing Information.

Standard Deduction of Dependents

For 1998, the standard deduction of a dependent is the greater of $700, or the dependent's earned income plus $250, but not more than the regular standard deduction amount for the dependent's filing status.

Exemption Amount Increased

The amount you can deduct for each exemption has increased from $2,650 in 1997 to $2,700 in 1998.

You lose all or part of the benefit of your exemptions if your adjusted gross income is above a certain amount. The amount at which this phaseout begins depends on your filing status. For 1998, the phaseout begins at $93,400 for married persons filing separately, $124,500 for unmarried individuals, $155,650 for heads of household, and $186,800 for married persons filing jointly. If your adjusted gross income is above this amount, use the Deduction for Exemptions Worksheet in the Form 1040 instructions to figure the amount you can deduct for exemptions.

Limit on Itemized Deductions Increased

You lose all or part of the benefit of your itemized deductions if your adjusted gross income is above a certain amount. In 1998, this amount is increased to $124,500 ($62,250 if you are married filing separately). For more information, See Publication 501.

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