Being a taxpayer in the USA, you have two ways to reduce your taxable income: first is standard deduction and the second is itemized deductions. The standard deduction is basically a fixed amount that you can subtract from your income, regardless of your actual expenses. Whereas, you can itemize your deduction on certain expenses only such as mortgage interest, state and local taxes, charitable contributions, and medical expenses.<\/p>\r\n\r\n\r\n\r\n
Most taxpayers choose the first one because it is simpler and often larger than the total of their itemized deductions.<\/p>\r\n\r\n\r\n\r\n
The standard deduction varies depending on your filing status, age, and blindness. Moreover, with the impact of inflation, the authority keeps changing the relaxation amount as well. Per the recent update for 2023 taxes, the standard deduction amounts are:<\/p>\r\n
\u2022<\/strong> <\/span>$13,850 for single or married filing separately You can also claim an additional amount in the following cases:<\/p>\r\n\r\n\r\n\r\n \u2013 If you are 65 or older, or blind, you can claim $1,300 more.<\/p>\r\n\r\n\r\n\r\n \u2013 If you are unmarried and not a surviving spouse you can claim an additional $1,650.<\/p>\r\n\r\n\r\n\r\n The standard deduction works by lowering your taxable income and thus your tax liability. For example, if you are single and earned $50,000 in 2023, taking the deduction amount of $13,850 will reduce your taxable income to $36,150. This means you will pay less tax than if you had a taxable income of $50,000.<\/p>\r\n\r\n\r\n\r\n No, you cannot apply for it, if:<\/p>\r\n \u2022<\/strong> <\/span>You are married and file separately from your spouse who itemizes deductions If you are eligible for it, you should compare it with your potential itemized deductions to see which one gives you a bigger tax benefit. You can use the IRS Interactive Tax Assistant to help you decide.<\/p>\r\n\r\n\r\n\r\n The standard deduction is a simple and effective way to save taxes for many taxpayers. If you qualify for it, you should claim it and enjoy its benefits.\u00a0The deadline for Form 940 is also approaching. Read\u00a0FUTA Tax Relief Programs<\/a>\u00a0for a better understanding of how it is related to seasonal workers.<\/p>\r\n\r\n\r\n\r\n Written by \u2013 Priyanka Rampal<\/em><\/strong><\/p>\r\n\r\n\r\n\r\n Follow us for more good reads and helpful insights if you have queries related to finance management and tax filing!<\/em><\/p>\r\n\r\n\r\n\r\n FACEBOOK\u00a0<\/strong><\/a>|\u00a0INSTAGRAM\u00a0<\/strong><\/a>|\u00a0LINKEDIN<\/strong><\/a><\/p>\r\n","protected":false},"excerpt":{"rendered":" Being a taxpayer in the USA, you have two ways to reduce your taxable income:\u2026<\/p>\n","protected":false},"author":1,"featured_media":2175,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[342,361],"tags":[],"class_list":["post-2173","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","category-us-taxes"],"_links":{"self":[{"href":"https:\/\/maspartner.com\/en-us\/wp-json\/wp\/v2\/posts\/2173","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/maspartner.com\/en-us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/maspartner.com\/en-us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/maspartner.com\/en-us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/maspartner.com\/en-us\/wp-json\/wp\/v2\/comments?post=2173"}],"version-history":[{"count":2,"href":"https:\/\/maspartner.com\/en-us\/wp-json\/wp\/v2\/posts\/2173\/revisions"}],"predecessor-version":[{"id":18649,"href":"https:\/\/maspartner.com\/en-us\/wp-json\/wp\/v2\/posts\/2173\/revisions\/18649"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/maspartner.com\/en-us\/wp-json\/wp\/v2\/media\/2175"}],"wp:attachment":[{"href":"https:\/\/maspartner.com\/en-us\/wp-json\/wp\/v2\/media?parent=2173"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/maspartner.com\/en-us\/wp-json\/wp\/v2\/categories?post=2173"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/maspartner.com\/en-us\/wp-json\/wp\/v2\/tags?post=2173"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
<\/span>\u2022<\/strong> <\/span>$27,700 for married filing jointly or qualifying widow(er)
<\/span>\u2022<\/strong> <\/span>$20,800 for head of household<\/span><\/p>\r\n\r\n\r\n\r\n<\/span>Some Common Concerns about Standard Deduction<\/strong><\/span><\/h3>\r\n\r\n\r\n\r\n
<\/span>Q1: Does it decrease my taxes or taxable income?<\/em><\/strong><\/span><\/h5>\r\n\r\n\r\n\r\n
<\/span>Q2: Can everyone apply for Standard Deduction?<\/em><\/strong><\/span><\/h5>\r\n\r\n\r\n\r\n
<\/span>\u2022<\/strong> <\/span>You are a nonresident alien or a dual-status alien (with some exceptions)
<\/span>\u2022<\/strong> <\/span>You file a return for less than 12 months due to a change in your accounting period
<\/span>\u2022<\/strong> <\/span>You file as an estate, trust, common trust fund, or partnership<\/span><\/p>\r\n\r\n\r\n\r\n<\/span>Q3: Should I always prefer Standard Deduction over Itemized Deductions?<\/em><\/strong><\/span><\/h5>\r\n\r\n\r\n\r\n