What is my standard deduction if I am a dependent?
Generally, if you are a dependant (or even if you can merely be claimed as a dependent on someone else’s tax return), your standard deduction will be less than the normal standard deduction associated with your filing status. For the 2006 tax year, it works like this: First, you should calculate what your total earned income is, and then add $300 to that amount. If that final number is less than $850, your standard deduction is $850. If that final number is greater than $850, then that final number (your earned income plus $300) is your standard deduction. However, if your earned income plus $300 is greater than what your standard deduction would be if you were not a dependent, you can only claim that standard deduction amount. For example, if your earned income was $7,500 and you are a single dependent, you cannot claim a standard deduction of $7,800 (the $7,500 plus $300). Rather, you can only claim a standard deduction of $5,150 (the standard 2006 deduction for non-dependants who are single).
If you are blind or 65 or older, when you are doing the above calculation, make the following addition: after adding $300 to your earned income, add an additional $1,000 (if you are married or a qualifying widower) or $1,250 (if you are single or the head of household). If you are blind and 65 or older, you should add $2,000 (if you are married or a qualifying widower) or $2,500 (if you are single or the head of household) to your earned-income-plus-$300.
As mentioned above, you should be aware of the fact that you have to claim this alternative to the standard deduction if anyone can claim you as a dependent on their tax returns, even if they do not actually claim you.