What is the difference between a personal deduction and a standard deduction for an unmarried self-employed woman? My new CPA used a personal deduction the past two years. My income is all royalty income, and I'm 74 years old.
I assume your term “personal deduction” is referring to the personal exemption that can be claimed on Line 42 of Form 1040. The personal exemption in 2017 is $4,050. The standard deduction can be claimed in lieu of itemized deductions you would report on Schedule A. The standard deduction is claimed on Line 40 of Form 1040, and it is $7,900 for single individuals who are at least 65 years old in 2017.
Your 2017 tax return should reflect a standard deduction of $7,900 on Line 40 of Form 1040 (Line 24 of Form 1040-A) and a personal exemption of $4,050 on Line 42 of Form 1040 (Line 26 of Form 1040-A).
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Answered by: James S. Anderson, CPA, is with Campbell, Rappold & Yurasits LLP in Allentown, Pa.