This is the chunk of money you can subtract from your income to lower your overall tax bill (and perhaps consequently raise your refund from Uncle Sam). You either choose to take this "standard" deduction or you decide to itemize.
You probably own a house if you itemize; your homeowner's tax bill is usually higher than non-owners', and that tax bill might even be greater than the standard deduction amount you can subtract, below.
More about standard deduction at Wikipedia
Tax year 2007
Married filing jointly or qualifying widow or widower: $10,700
Head of household: $7,850
Married filing separately: $5,350
Single: $5,350
Tax year 2008
Married filing jointly or qualifying widow or widower: $10,900
Head of household: $8,000
Married filing separately: $5,450
Single: $5,450
Source MSN
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