The standard tax deduction is a fixed amount that the tax system lets you deduct from your income, no questions asked.
- Is the Standard Deduction different if someone claims you as a dependent?
- Does the Standard Deduction change each year?
- Who's eligible for a Standard Deduction increase?
- Who can’t claim the Standard Deduction?
- What is the difference between Standard Deductions vs. itemized deductions?
- Is it better to use the Standard Deduction or itemize?
- What if the Standard Deduction is more than my income?
What are tax deductions?
Tax deductions allow individuals and companies to subtract certain expenses from their taxable income, which reduces their overall tax bill. The tax system gives you a choice of adding up all of your deductible expenses—and providing evidence of those expenses to the IRS upon request—or simply deducting a flat amount, no questions asked. That flat amount is called the "standard deduction."
What are Standard Deductions?
Standard Deductions ensure that all taxpayers have at least some income that is not subject to federal income tax. The Standard Deduction amount typically increases each year due to inflation. You usually have the option of claiming the Standard Deduction or itemizing your deductions. However, you can't claim both in the same year. You will find that many states that impose an income tax will also allow you to claim a similar type of Standard Deduction on your state income tax return.
How much is the Standard Deduction?
The amount of your standard deduction depends on the filing status you qualify for. In 2023, for example, single taxpayers and married taxpayers who file separate returns can claim a $13,850 standard deduction. Married couples filing jointly can claim an amount that's twice as large, $27,700, and taxpayers filing as "head of household" (unmarried individuals with dependents) can claim a standard deduction of $19,400.
Is the Standard Deduction different if someone claims you as a dependent?
If you are being claimed as a dependent, your Standard Deduction is lower. For example, in 2023, the Standard Deduction for dependents is whichever is greater:
- Earned income plus $400
Note that for option two, it can't equal more than the Standard Deduction for your filing status. So, if you are a single taxpayer, it couldn't exceed the $13,850 Standard Deduction for 2023.
Does the Standard Deduction change each year?
Yes, the Standard Deduction is adjusted each year for inflation. Before filing your taxes, you should check how much the Standard Deduction is for the year.
Who's eligible for a Standard Deduction increase?
The federal income tax system increases the Standard Deduction for taxpayers who are age 65 or older, blind, or both. The IRS allows the blindness adjustment for people who are either partially or totally blind. The tax code defines "partly blind" as having a field of vision of no more than 20 degrees or corrected vision no better than 20/200; you'll need a certified statement from an eye doctor backing up your claim. Many states offer similar adjustments for age and blindness.
Who can’t claim the Standard Deduction?
Some taxpayers can't take the federal Standard Deduction. If you are married but file taxes separately and your spouse itemizes deductions on their return, then you can't claim the Standard Deduction. You also can't claim it if you (or your spouse, if filing jointly) were a nonresident alien at any time during the tax year. Finally, if you change your annual accounting period and file a return that covers less than 12 months, the Standard Deduction isn't available to you.
What is the difference between Standard Deductions vs. itemized deductions?
While the Standard Deduction is a fixed dollar amount, an itemized deduction allows you to account for all applicable deductions individually. Itemized deductions are usually used when your eligible expenses are higher than the amount of the Standard Deduction.
To itemize deductions, you would use Schedule A, which allows you to enter individual amounts for expenses that fit into the categories outlined. This includes medical and dental expenses, gifts to charity, and other itemized deductions.
Is it better to use the Standard Deduction or itemize?
It's much simpler to claim the Standard Deduction over itemized deductions, but it could cost you money. The IRS recommends that you take the time to run the numbers to see which option gives you a bigger deduction (TurboTax will do this for you).
In particular, you might consider itemizing if you made substantial charitable donations, if you paid mortgage interest and property taxes on your home, or if you had large amounts of out-of-pocket medical expenses.
What if the Standard Deduction is more than my income?
There are generally three scenarios that may apply to you:
- In many cases, if you don’t earn more than the Standard Deduction you won’t have to file income taxes. For example, if the Standard Deduction is $12, 950, and you earn less than $12,950, then you might not need to file your income tax return. See the next point for further clarification.
- You might have to file income taxes, even though your earnings were less than the Standard Deduction, depending on the type of income you earned. For example, if you earn self-employment income, you’ll have to file if it’s over the self-employment reporting threshold.
- If you had too much money withheld throughout the year, even if your earnings weren't more than the Standard Deduction, you’ll need to file income taxes if you want to receive a refund.
- If you’re below the income threshold that would require you to file, but you qualify for refundable credits, you may want to consider filing anyway to take advantage of the refund you’re entitled to based on those credits.
For a full explanation, read our article on who needs to file an income tax return.
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