Standard Deduction

• Deductions are allowable write-offs that reduce a person's tax liability. The federal government offers a standard deduction for all those filing a return. The standard deduction for 2009 was $11,400 for married couples, $5,700 for singles and $8,350 for those filing head of household. According to the Internal Revenue Service (IRS), two out of three people claim the standard deduction on their federal returns.
  
  

Itemized Deduction

• For those who want to add up actual deductions, itemizing deductions is allowed. Things included in itemized deductions are mortgage interest, medical expenses, state income taxes and gifts to charities.
  
  

Choice

• After itemizing deductions, people choose which amount is higher. The choice is between the personal standard deduction amount and the itemized deduction amount. Whichever is higher, the person decides to use. The higher the deduction is, the lower the person's income is. The deduction reduces taxable income.