The standard deduction is a monetary amount you can deduct from your taxable income. This amount usually increases annually with inflation and varies depending on your marital and family status.
How does the standard deduction work?
When filing taxes, there are two ways to claim deductions, which are monetary amounts that reduce your taxable income. You can choose to itemize deductions, or you can choose the standard deduction. While itemized deductions require multiple calculations across a variety of tax topics, the standard deduction is a specific number that does not take much of your personal circumstances into account.
Example of the standard deduction
Once you determine your standard deduction, you can subtract that amount from your taxable income. For example, if you are married and file jointly with your spouse, you may decide to take your standard deduction of $25,900 in 2022.
If your combined taxable income is $75,900 for the year, your standard deduction would reduce your taxable income to $50,000. You may also be able to lower your taxable income by other amounts.
What is the standard deduction amount?
The amount of standard deduction you qualify for depends on your marital status, age, and whether you are blind. The IRS provides an interactive tool to estimate the amount you qualify for if you’re unsure of your marital status. It takes about 15 minutes to complete. Here are the standard deduction amounts for each filing status for tax years 2022 and 2023:
Filing Status 2022 Deductions 2023 Deductions
Single $12,950 $13,850
Head of Household $19,400 $20,800
Married Filing Jointly $25,900 $27,700
Married Filing Separately $12,950 $13,850
Qualifying Widow $25,900 $27,700
Special adjustments to the standard deduction
These general figures may be adjusted by filing status for some taxpayers, and other rules determine who can also claim the standard deduction.
The standard deduction based on age or blindness
Taxpayers who are 65 years or older, or individuals who are legally blind, receive an additional standard deduction. It is calculated by adding the standard deduction for the taxpayer based on their filing status, plus an additional amount.
The additional amount for taxpayers who are 65 or older or blind is $1,750 if they are single or head of household and $1,400 for married filing jointly in 2022.
Special rule for married couples
You and your spouse must either both take the standard deduction or both itemize deductions if you are married but filing separate returns. You cannot mix itemized deductions and the standard deduction, with one spouse itemizing and the other taking the standard deduction.
It usually makes sense to calculate taxes both ways, with one spouse itemizing deductions and the other taking the standard deduction, to see which results in the best overall tax savings.
The standard deduction for dependents
Taxpayers who can be claimed as dependents on someone else’s tax return have variable standard deduction amounts. For 2022, their standard deduction is limited to either $1,100 or their earned income plus $350, whichever is greater. In both cases, the deduction is capped at the maximum standard deduction for their filing status – it cannot exceed that.
Standard deductions vs. itemized deductions
Many taxpayers find that the standard deduction amount provides a larger deduction than the sum of all allowed itemized deductions, but it depends on your marital status and economic factors. If you total all eligible deductions and the amount you get is greater than the standard deduction, it is likely better to itemize deductions.
Events
Note
The Tax Cuts and Jobs Act nearly doubled the standard deduction in 2018, while simultaneously removing and modifying some itemized deductions.
These changes will make it harder to surpass the required amount in deductions that you will need to file an itemized return instead of a standard deduction. You may want to prepare your return both ways – especially if you believe you have many itemized deductions – to ensure you’re claiming the largest deduction possible. Every dollar counts.
Frequently Asked Questions (FAQs)
What is the standard deduction for 2021?
The standard deduction is adjusted annually for inflation, and the limits depend on your filing status. For 2022, the standard deduction ranges from $12,950 for single filers to $29,900 for married couples filing jointly. In 2023, the deductions are $13,400 for single filers and $30,700 for married couples filing jointly.
What is the difference between the standard deduction and itemized deductions?
The standard deduction is a fixed amount you can deduct from your taxable income based on your filing status and number of dependents for the tax year you are filing. Itemized deductions allow you to deduct a dollar amount from various expenses, including property taxes and mortgage interest. If the total allowable deductions exceed the standard deduction, it is generally better to itemize your deductions.
Updated by Jess Feldman
Source: https://www.thebalancemoney.com/standard-deduction-3193021
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