Your biggest goal at tax time? To keep your tax liability low and your refund high. That’s why you like the idea of tax deductions, and that’s completely understandable. The problem, though, is that if you’re like many taxpayers, you have heard the terms “itemized deductions” and “standard deduction,” but you’re not 100% sure how they differ, according to TaxAudit, which has earned many high ratings in recent audit defense reviews. Let’s take a peek at what these two types of deductions are and how they can affect you at tax time.
First, the standard deduction refers to a fixed deduction amount that is based on your filing status, your age, and your disability status (specifically, if you are blind). For 2019, your standard deduction is $12,200 if you are single and $24,400 in if you are married and you and your spouse are filing jointly. If you’re married but filing separately, your standard deduction is $12,200, although this figure drops to zero if your spouse chooses to itemize. Finally, if you are filing your taxes as the head of your household, then you’ll receive a standard deduction of $18,350.
Note that your standard deduction amount increases by $1,300 if you are a married person over 65 years old or you’re blind. Also, it increases by $1,650 if you are not married and you’re blind or over 65.
Instead of taking the standard deduction, it may behoove you to take advantage of itemized deductions if your itemized deduction amount surpasses the standard deduction figure. These deductions include the likes of charity donations, gambling losses, local taxes, state taxes, taxes on real estate, and medical costs, based on tax audit reviews. You’ll report these deductions on your Schedule A form when you file your taxes. A tax expert or your tax software can help you to determine which deduction route would be the smartest choice for you at tax time each year.