Even if you have no other qualifying deductions or tax credits, the IRS gives you the standard deduction on a no-questions-asked basis. The amount is subtracted from your adjusted gross income. Along with your other exemptions, it lowers the amount of income you have to pay taxes on.
If you’re using the simplest approach to filing taxes, the Form 1040EZ, you have to use the standard deduction; you don’t have the option to itemize. If you use the longer Form 1040, you have a choice between taking the uniform standard deduction or itemizing your own customized deductions.
Using the standard deduction means you lose the ability to claim home mortgage interest and many other itemized tax deductions — medical expenses or charitable donations, for example. But if you don’t itemize, you don’t have to hang on to records supporting your deductions in case the IRS decides to audit you.
The standard deduction amounts by filing status:
|Filing status||2016 tax year||2017 tax year||2018 tax year|
|Married, filing jointly||$12,600||$12,700||$24,000|
|Married, filing separately||$6,300||$6,350||$12,000|
|Head of household||$9,300||$9,350||$18,000|
The standard deduction is $1,250 higher for those who are over 65 or blind; it’s $1,550 higher if also unmarried and not a surviving spouse. If someone can claim you as a dependent, you get a smaller standard deduction.
When to claim the standard deduction
Although using the standard deduction is easier than itemizing, if you have a mortgage or home equity loan it’s worth running basic calculations to see if itemizing would save you money. Use the numbers you find on Form 1098, the Mortgage Interest Statement.
Compare your mortgage interest deduction amount to the standard deduction plus dependent deductions. When you do your taxes online, most preparers will calculate your taxes both ways to see which offers a lower tax bill.
And keep in mind that property taxes, state income taxes or sales taxes, charitable donations and losses from thefts or disasters are deductible, too, if you itemize.
This post was updated on Jan. 27, 2017.