Standard Deduction

• The standard deduction varies according to your filing status. Five filing statuses are available -- single, married and filing jointly, married and filing separately, head of household and widow/widower. The smallest standard deduction (for the 2010 tax year) is $5,700, for single taxpayers and married taxpayers who file separately. The largest standard deduction is $11,400, for married taxpayers filing jointly and for widows/widowers. These deductions increase if you are at least 65 years old, or blind. If you use the standard deduction, you cannot itemize your deductions on Schedule A.
  
  

Business Expenses

• You may deduct certain business expenses regardless of whether you are an employee or are self-employed. If you are an employee, you may only deduct expenses that you paid for out-of-pocket that were not reimbursed by your employer. In all cases, the expenses must be reasonable and closely related to your business. Examples of deductible expenses include business travel (including accommodation and meals) , business entertainment, business equipment purchases, home office expenses, and business training and professional development. Limitations apply -- for example, you can only deduct home office expenses if your home office is used exclusively for business purposes, unless you are a qualified daycare provider.
  
  

Medical

• You may deduct necessary medical and dental expenses, to the extent that these expenses were not covered by insurance. You may also deduct health insurance premiums. Expenses for surgery that you undertake for purely cosmetic reasons are not deductible.
  
  

Interest

• You may deduct interest paid on a loan used to purchase a home or buy property you hold for investment purposes. You may also deduct prepaid interest on a home mortgage loan (known as "home mortgage points") as long as your loan debt does not exceed $1,000,000.
  
  

Charitable Contributions

• You may deduct contributions to nonprofit organizations qualified under Section 501(c) of the Internal Revenue Code. Organizations that typically qualify include churches, hospitals, universities and public charities. Depending on the type of organization, you may deduct up to 50 percent of your adjusted gross income.
  
  

State and Local Taxes

• You may deduct state and local income, real estate, personal property and sales taxes from your taxable income, along with certain motor vehicle taxes (depending on vehicle price, vehicle type and income.) These taxes must have been actually paid, not merely assessed.
  
  

Uninsured Losses

• You may deduct losses that are typically covered by insurance, such as theft losses and losses due to natural disaster. You may not deduct these amounts, however, to the extent that they are already covered by an insurance policy.