Understanding The Standard Tax DeductionPublished:
Claim the Standard Deduction on Your 1040 Return to Lower Your Income Tax Liability
Are you going to take the standard tax deduction, or will you claim itemized deductions? To better answer this question, you may need to learn more about the standard deduction and the benefits that it offers. One thing is for sure: you need to take full advantage of as many tax deductions as possible. This is one of the best ways to lower your income tax liability.
RELATED: Income Tax Basics
What Is the Standard Deduction?
The standard deduction is a set dollar amount based on your filing status, which reduces your taxable income. It is important to note that you cannot take the standard deduction if you are itemizing your deductions. You have to choose one or the other — ideally the one that will do you the most good in terms of tax savings.
As noted above, the standard tax deduction is based on your filing status (including single, married filing separately, married filing jointly, head of household, or qualifying widow/widower).
How Much Is the Standard Deduction Worth?
For tax year 2021, the standard deduction amounts are as follows:
- $12,550 for Single filer taxpayers
- $12,550 for Married Filing Separately taxpayers
- $18,800 for Head of Household filer taxpayers
- $25,100 for Married Filing Jointly taxpayers
- $25,100 for Qualifying Widow(er) filer taxpayers
The standard deduction amounts tend to change from year to year, as they are adjusted for inflation.
It is important to note that the amount of your standard deduction may be reduced if you are claimed as a dependent on another person’s income tax return.
RELATED: 2021 Federal Tax Rates & Brackets
The Additional Standard Deduction
Did you know that there is an additional standard tax deduction for people over the age of 65 and/or those who are blind? The deduction for the blind is allowed if you (or your spouse if filing jointly) are medically confirmed to be totally or partially blind as of the last day of the tax year.
The 2021 additional standard deduction for the elderly (age 65 or older) or blind is $1,350. This amount increases to $1,700 if you are using the Single or Head of Household filing status. If you are both elderly and blind, the amount of your additional standard deduction is doubled.
Other additions to the standard deduction may also exist for loss from a Federally-declared disaster area, as well as for state/local real estate taxes.
Who Doesn’t Qualify for the Standard Deduction?
Keep in mind that there are several groups of people who do not qualify to claim the standard deduction. According to the IRS, this includes the following taxpayers:
- A married individual filing as “married filing separately” whose spouse itemizes deductions
- An individual who was a nonresident alien or dual status alien during the year (although there are certain exceptions)
- An individual who files a return for a period of less than 12 months due to a change in his/her annual accounting period
- An estate or trust, common trust fund, or partnership
Understanding the standard tax deduction is very important so you can properly prepare your income tax return. You should do the math to see whether the standard deduction or itemizing deductions does a better job at lowering your tax liability. This will make it easier for you to decide between the standard deduction and itemizing your deductions.
For more information, please see IRS Publication 501 (Exemptions, Standard Deduction, and Filing Information).