When you file your federal income tax return, you have two choices: take the standard deduction or itemize your deductions.
According to the IRS, most taxpayers use the option that lowers their tax liability the most — however, changing tax laws mean that people who itemized in the past might want to switch to the standard deduction.
Here is some more information about your two options:
Standard Deduction
The standard deduction is a specific amount that taxpayers can subtract from their taxable earnings. The amount increases slightly each year and varies by filing status, whether the taxpayer is 65 or older — or blind — and whether another taxpayer can claim them as a dependent. Here are the standard deductions for the 2022 and 2023 tax years:
- Single: $12,950 for 2022, $13,850 for 2023.
- Married, filing jointly: $25,900 for 2022, $27,700 for 2023.
- Married, filing separately: $12,950 for 2022, $13,850 for 2023.
- Head of household: $19,400 for 2022, $20,800 for 2023.
Not everyone can take the standard deduction. Excluded taxpayers include:
- A married individual filing as married filing separately whose spouse itemizes deductions.
- An individual who files a tax return for a period of less than 12 months.
- An individual who was a nonresident alien or a dual-status alien during the year. Nonresident aliens who are married to a U.S. citizen or resident alien can take the standard deduction, but only in certain situations.
Most filers can find the standard deduction on the first page of Form 1040. For filers using Form 1040-SR, U.S. Tax Return for Seniors, the standard deduction is on page 4.
Itemized Deductions
If you itemize deductions, you lower your taxable income from a list of qualifying expenses that were approved by the IRS. You can itemize deductions by filing Schedule A, Form 1040, Itemized Deductions. Itemized deductions that may be claimed include:
- State and local income or sales taxes.
- Real estate and personal property taxes.
- Home mortgage interest.
- Personal casualty and theft losses from a federally declared disaster.
- Donations to a qualified charity.
- Unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income.
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More: 6 Types of Retirement Income That Aren’t Taxable
Before making itemized deductions, review the instructions for Schedule A Form 1040 for more information on IRS limitations.
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