Ah, things were much simpler when you were young.\u00a0When it was time to\u00a0file your income tax return<\/a>\u00a0as a single taxpayer, you probably either did it yourself or simply dropped it off at the local\u00a0tax preparer\u2019s\u00a0office. Perhaps you even used the\u00a01040EZ Form.<\/p>\n RELATED:\u00a0Which Tax Form Do I File Now That 1040A & 1040EZ Are No Longer Used?<\/a><\/p>\n As you get older, along come the dependents, debt obligations, and other responsibilities. Your tax liability increases and suddenly filing a return has gotten a lot more complicated. But don\u2019t despair! The federal government offers a number of tax benefits (with certain eligibility requirements) that can help ease your tax burden, including\u00a0tax deductions<\/a>.<\/p>\n Tax deductions lower your taxable income.\u00a0<\/strong>In general, a taxpayer must decide between using itemized deductions\u00a0or<\/u>\u00a0taking the standard deduction. That means if you claim the standard deduction, you cannot itemize deductions. Conversely, if you itemize deductions, you cannot claim the standard deduction. You are allowed to use whichever type of deduction results in the lowest tax.<\/p>\n Your standard deduction amount is based on your\u00a0filing status<\/a>\u00a0and it is subtracted from your\u00a0AGI (adjusted gross income)<\/a>.\u00a0In other words, it reduces the amount of income you\u2019re taxed on. For tax year 2020, the standard deduction amounts are:<\/p>\n There is an additional standard deduction of $1,300 for taxpayers who are considered elderly (age 65 or older) or blind.<\/p>\n Note that the standard deduction amounts often change from year to year.<\/p>\n RELATED:\u00a02020 Federal Tax Rates and Standard Deduction Amounts<\/a><\/p>\n Itemized deductions also lower your taxable income, but they are based on your income level and are calculated using the percentage from your\u00a0marginal tax bracket<\/a>. For example, if you are in the 24% tax bracket, a $1,000 deduction saves you $240 in tax (0.24 x $1,000 = $240).<\/p>\n To calculate how much your itemized deductions are worth, you must add up the tax-deductible expenses you paid during the year. This may include the following:<\/p>\n Note that some itemized deductions are based on a minimum amount (or \u201cfloor\u201d), meaning that you can only deduct amounts that exceed the specified \u201cfloor.\u201d<\/p>\nThe Standard Deduction<\/h3>\n
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Itemized Deductions<\/h3>\n
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