Standard Deduction vs. Itemized Deductions: Which Is Right for You?

When filing a tax return, taxpayers can either claim standard deduction or claim itemized deductions to reduce their taxable income.

What is the Standard Deduction?

Standard deduction is a fixed amount that every taxpayer qualifies for, and it varies depending on filing status, age and blindness.

The standard deduction is adjusted for various factors like inflation each year.

For the 2024 tax year, the standard deduction is listed as follows:

• Single or Married Filing Separately: $14,600
• Married Filing Jointly or Qualifying Surviving Spouse: $29,200
• Head of Household: $21,900

Compared to 2023, the standard deduction for the 2024 tax year has increased between $750 and $1,500 (depending on filing status).

For example, an individual filing as a single taxpayer who makes $65,000 per year and who claims the standard deduction would subtract $14,600 from their taxable income. As a result, $50,400 would be subject to federal income tax.

When it comes to state taxes, the standard deduction may work differently. Some states may have their own standard deductions that may differ from federal standard deductions.

Using Itemized Deductions or Standard Deduction

When preparing a tax return, taxpayers have the option to either claim the standard deduction or itemize the deductions. If the total amount of your itemized deductions is greater than the standard deduction, you will take larger deduction to save taxes. However, many taxpayers elect to take standard deduction as it could be time-consuming for taxpayers to carefully document and calculate their related expenses when itemizing deductions.

There are a range of expenses that are only deductible when you choose to itemize. Common expenses include mortgage interest, state and local income or sales taxes, property taxes, medical and dental expenses, and charitable donations etc.

Taking the standard deduction is a time-saving option for many taxpayers who do not have complicated tax situations. For those with significant medical expenses or other expenses, it could be more beneficial to itemize. It is always a good idea to meet with a tax consultant to discuss the options.

Standard Deduction for 2025

For the 2025 tax year, the standard deduction amounts released by IRS are as follows:

• Single or Married Filing Separately: $15,000
• Married Filing Jointly or Qualifying Surviving Spouse: $30,000
• Head of Household: $22,500

Standard Deductions for Dependents, Seniors and More

Taxpayers who are age 65 or older or who are legally blind qualify for an additional deduction of $1,950. For those who fall into both categories, the deduction is doubled to $3,900.

Key Takeaways

In conclusion, understanding whether to claim the standard deduction or itemize deductions can have a significant impact on your tax return. While the standard deduction offers a simple, time-saving option for many, itemizing may be more beneficial for those with substantial qualifying expenses.

It's important to weigh both options and consult with a tax professional to ensure you're maximizing your potential tax savings. With the adjustments to the standard deduction for 2024 and the upcoming changes for 2025, staying informed on the latest figures can help you make the best decision for your financial situation.

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