Definition And How A Standard Deduction Works

standard deduction

Every year, you have to pay an amount of income tax to Uncle Sam. In the process of calculating how much your final tax bill is, you are allowed to lower your taxable income through two main deduction methods: itemized deductions and the standard deduction. 

With the itemized deduction method, you need to add up all your deductible expenses and provide evidence to the IRS upon request. Meanwhile, you can just simply subtract a fixed amount without having to do any extra steps through the standard deduction method. 

In this article, we will look into details of what standard deduction is, how it works, and the newest information about standard deduction in 2022. 

Standard deduction definition 

The standard deduction is a fixed amount decided by the government that reduces the taxable income on which you’re taxed. The standard deduction amount changes every year and generally increases due to inflation.  

How much you can deduct with the standard deduction is based on your filing status, your age, and whether you are disabled or if you’re claimed as a dependent on someone else’s tax return.

How does standard deduction work?

The mechanism of the standard deduction is quite simple—you just need to remember the two following points:

  • Standard deduction offers you a flat amount of deduction based on each individual’s situation. That means you can’t change or increase the number as you please. To determine how much you can deduct with the standard deduction, check our information table in the next section!  
  • Suppose you opt to take the standard deduction. In that case, you can’t itemize on your tax return, which means you can’t subtract deductible expenses incurred throughout the year manually (e.g., home mortgage interest, medical expenses, etc.). Since you can only choose one method, it’s best to calculate your taxes in both ways to find out which one helps you reduce more. 

What is the standard deduction for 2022? 

The information below on standard deduction is applied for the tax returns 2022, filled in 2023. 

Filing Status2022 Standard Deduction
Single$12,950
Married; Filing Separately$12,950
Married; Filing Jointly$25,900
Surviving Spouse$25,900
Head of Household$19,400

You might be eligible for a higher standard deduction than the amounts above if any of the following conditions are met:

  • You or your spouse is 65 years of age or older.
  • You or your spouse is blind (to qualify, you must have a certified letter from an eye doctor stating that you don’t have corrected vision of at least 20/200 or that your field of vision is 20 degrees or less)

Who can’t take the standard deduction?

Generally, anyone can take the standard deductions apart from some special cases:

  • You’re married and filing separately, and your spouse itemizes their deductions.
  • You’re a nonresident or dual-status alien during the year.
  • You file a tax return for less than 12 months. 
  • You are a trust, common trust fund, partnership, or an estate.

We hope this guide has helped you understand better what standard deduction is and how it affects your taxable income! 

Want to know more about finance? 

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