Once you’ve figured out your adjusted gross income for your taxes, it’s time to take deductions. You have one of two options: the standardized deduction or itemized deductions. You cannot take both.
What Is the Standard Deduction?
The standard deduction is a fixed some that is based on your filing status. For 2023, those standard deductions are:
- Single or Married Filing Separately: $13,850
- Married Filing Jointly: $27,700
- Head of Household: $20,800
If you are aged 65 and/or blind, you can add the following amounts to your standard deduction:
- Married Filing Jointly, Qualifying Surviving Spouse or Married Filing Separately: $1,500
- Single or Head of Household: $1,850
Since the Tax Cuts and Jobs Act in 2017, the standard deduction has increased while many eligible itemized deductions were removed or limited.
Itemized Deductions
Potential itemized deductions include: medical or dental expenses that exceed 7.5% of adjusted gross income, certain charitable contributions limited to 60% of AGI, state and local income or sales taxes paid, gambling losses, real estate and property taxes paid, mortgage interest, mortgage insurance premiums, and personal casualty and theft losses attributable to a federally declared disaster.
Which Deduction Option Is Right for You?
Some people cannot take the standard deductions and will have to itemize. If you’re married filing separately and your spouse itemizes, you will have to itemize too. If you are a non-resident or dual-status alien, you also must itemize. Most other people will benefit most from choosing the standard deduction unless their eligible itemized deductions are larger than the standard deduction they qualify for.
Need help figuring out which deduction option will get you the lowest tax bill? Contact one of our tax preparers today.
**Please keep in mind: Tax laws, eligibility requirements and rates change often, and these lists are not exhaustive. Always contact a tax preparer for the most up-to-date information.