Standard deduction how does it work

Unlike the standard deduction, the dollar amount of itemized deductions differs from taxpayer to taxpayer. While standard deductions are —as the name implies — a standard or fixed amount, itemized deductions are calculated by adding up all applicable deductions, then subtracting that number from your taxable income.

In some situations, it makes sense to itemize vs. Itemizing your tax deductions makes sense if you:. This can happen if you itemize on your federal and state returns and get a larger tax benefit than you would if you claimed the standard deduction on your federal and state returns. Have additional questions about whether to claim itemized vs. Our tax pros speak the tricky language of taxes and are committed to helping you better understand your taxes.

Make an appointment with one of our tax pros today. Do you know how to claim child care expenses for a nondependent child? Can adult siblings be claimed on your tax returns? Learn more about claiming dependents. For Simple Tax Returns Only. Video: What is the Standard Tax Deduction? What Are Tax Credits? What Are Itemized Tax Deductions? Which Charitable Contributions are Tax Deductible?

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Skip To Main Content.

What Are Standard Tax Deductions? Standard deduction amounts The amount of your standard deduction depends on the filing status you qualify for. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance.

Develop and improve products. List of Partners vendors. The standard deduction is the portion of income not subject to tax that can be used to reduce your tax bill. The Internal Revenue Service IRS allows you to take the standard deduction if you do not itemize your deductions using Schedule A of Form to calculate taxable income.

Income tax is the amount of money that the federal or state government takes from your taxable income. It is important to note that taxable income and total income earned for the year are not the same. This is because the government allows a portion of the total income earned to be subtracted or deducted to reduce the income that will be taxed.

Taxable income is usually smaller than total income due to deductions, which help to reduce your tax bill. You can select one of two types of deductions: itemized deductions, or the standard deduction. Whichever one you choose is up to you, but you cannot use both.

The itemized deduction option allows you to list all your tax-deductible expenses for the year, such as property tax , medical expenses , eligible charity donations , gambling losses , and other costs incurred that influence your bottom-line tax figure. Normally, if the total value of itemized deductions is higher than the standard deduction, then you would itemize.

Otherwise, you should opt for the standard deduction. Note, however, that students and business apprentices from India may be eligible to claim the standard deduction under Article 21 of the U. For taxes filed in , the standard deductions are as follows:. For taxes filed in , the standard deductions increase to:. New standard deduction amounts were introduced by the Tax Cuts and Jobs Act at the end of and nearly doubled the previous amounts.

They are set to expire on Dec. The federal income tax system and some states have higher standard deductions for people who are at least 65 years old and for people who are blind.