Under United States tax law, the standard deduction is the portion of your income in U.S. dollar amount that is not subject to tax and that can be used to reduce your tax bill. The amount of your standard deduction is based on three main factors:
- Your filing status
- Your age, and
- Whether you are disabled or claimed as a dependent on someone else’s tax return
The standard deduction can be taken only if you do not itemize deductions using Schedule A of Form 1040 to calculate your taxable income. The reason is that you can only select one of the two types of deductions: itemized deductions or the standard deduction. Whichever one you choose is your decision, but you cannot use both. Usually, if the total value of itemized deductions is higher than the standard deduction, you would itemize. Otherwise, you should opt for the standard deduction because the amounts are, as the name itself says, standard. What this means is that the deduction to reduce your taxable income will not depend on whether or not you incurred eligible tax-deductible expenses or not, instead the amount you will be able to deduct will be based on the yearly stipulated amounts.
The deduction amounts for the year 2020 and 2021 are as follows:
2020 Standard Deduction Amounts
For 2020 taxes filed in April 2021 the standard deductions are as follows:
- $12,400 for single taxpayers
- $12,400 for married taxpayers filing separately
- $18,650 for heads of households
- $24,800 for married taxpayers filing jointly
- $24,800 for qualifying widow(er)s
2021 Standard Deduction Amounts
For 2021 taxes filed in April 2022 the standard deductions are as follows:
- $12,550 for single taxpayers
- $12,550 for married taxpayers filing separately
- $18,8000 for heads of households
- $25,100 for married taxpayers filing jointly
- $25,100 for qualifying widow(er)s
One of the main reasons that taxpayers use the standard deduction more often than itemized deductions is that many taxpayers benefit more from the standard deduction because the amount is greater than the total they could reach if they added up all their eligible tax-deductible expenses separately. Additionally, by using the standard deduction, taxpayers don’t have to keep track of every possible qualifying expense throughout the year that will qualify as a tax-deductible expense.
However, beware that not all taxpayers qualify for the standard deduction. Read my article on Limits to Standard Deduction to fully understand who these taxpayers are, and whether you qualify or not for this deduction.
Need to Know More?
Contact Licensed Tax Attorney Alexandra Sabalier for an initial consultation, and get your questions answered personally by her, and your tax issues solved in a reliable and confidential manner.
