The standard deduction reduces your taxable income. In 2018 the standard deduction is $12,000 for single filers and married filers filing separately, $24,000 for married filers filing jointly and $18,000 for heads of household.
How the standard deduction works
- Even if you have no other qualifying deductions or tax credits, the IRS lets you take the standard deduction on a no-questions-asked basis. The standard deduction reduces the amount of income you have to pay taxes on.
- You can either take the standard deduction or itemize on your tax return — you can’t do both. Itemized deductions are basically expenses allowed by the IRS that can decrease your taxable income (see a long list of popular tax deductions here).
- If you use Form 1040EZ or Form 1040A, you have to take the standard deduction; you don’t get the option to itemize.
- If you use the longer Form 1040, you can either take the standard deduction or itemize.
- Taking the standard deduction means you can’t deduct home mortgage interest or take many other itemized tax deductions — medical expenses or charitable donations, for example. (But if you itemize, you have to hang onto records supporting your deductions in case the IRS decides to audit you.)
Here are the standard deduction amounts by filing status:
|Filing status||2018 tax year||2017 tax year|
|Married, filing jointly||$24,000||$12,700|
|Married, filing separately||$12,000||$6,350|
|Head of household||$18,000||$9,350|
- The standard deduction is $1,300 higher for those who are over 65 or blind; it’s $1,600 higher if also unmarried and not a surviving spouse.
- If someone can claim you as a dependent, you get a smaller standard deduction.
Using the standard deduction is easier, but it’s worth seeing if itemizing would save you more money.
When to claim the standard deduction
- Here’s the bottom line: If your standard deduction is less than your itemized deductions, you probably should itemize and save money. If your standard deduction is more than your itemized deductions, it might be worth it to take the standard and save some time.
- Try this quick check. Although using the standard deduction is easier than itemizing, if you have a mortgage or home equity loan it’s worth seeing if itemizing would save you money. Use the numbers you find on Form 1098, the Mortgage Interest Statement (you typically get this from your mortgage company at the end of the year). Compare your mortgage interest deduction amount to the standard deduction. Property taxes, state income taxes or sales taxes, and charitable donations can be deductible, too, if you itemize.
- Run the numbers both ways. If you’re using tax software, it’s probably worth the time to answer all the questions about itemized deductions that might apply to you. Why? The software (or your human tax preparer) can run your return both ways to see which method produces a lower tax bill. Even if you end up taking the standard deduction, at least you’ll know you’re coming out ahead.