WHAT IS THE STANDARD DEDUCTION?
The IRS’s standard deduction provides a quick, one-size-fits-all solution.
When you file your taxes, there are a plethora of deductions to contend with. But for taxpayers looking for the easy route, the IRS’s standard deduction provides a quick, one-size-fits-all solution. Put simply, the IRS's standard deduction is a fixed dollar amount that, like other deductions, reduces the amount of income on which you are taxed. The standard deduction amount varies depending on your filing status — this tax year, it sits at $13,580 for single filers and $27,700 for married couples filing jointly.
The primary benefit of the standard deduction is that it simplifies the tax-filing process. Instead of itemizing deductions, which can be time-consuming and requires thorough documentation (often done continuously over the year), you can take the standard deduction and just be done with it. Although quick and easy to claim, the standard deduction is not perfect for every taxpayer; for some, taking the time to itemize their deductions may lead to an abundance of tax savings. This primarily applies to taxpayers who are eligible for many deductions, such as mortgage interest or charitable donations, that add up to more than the standard deduction. In this case, you would claim those deductions on Schedule A of Form 1040 instead.
If you aren’t sure whether the standard deduction is suitable for your tax situation — or want to know how much you could save on your taxes by itemizing your deductions — consult your local Liberty Tax pro.
Standard deduction FAQs
Do I have to claim the standard deduction?
No, you are not obligated to claim the standard deduction. You can choose to itemize your deductions instead if you believe this will lead to greater tax savings.
What is the difference between the standard deduction and itemized deductions?
The standard deduction is a fixed dollar amount that reduces the amount of income on which you are taxed. On the other hand, itemized deductions allow you to deduct specific expenses, such as mortgage interest or charitable donations, from your taxable income.
Will taking the standard deduction affect my eligibility for other tax benefits?
Taking the standard deduction will not affect your eligibility for other tax benefits, such as the Earned Income Tax Credit or the Child Tax Credit.
Can I take the standard deduction if I am self-employed?
Yes, you can take the standard deduction even if you are self-employed or work as a freelancer. The standard deduction amount is the same for everyone, regardless of their employment status.
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