You have a choice between claiming the standard deduction when you prepare and file your tax return, or you can opt for itemizing your deductions. But you can't do both.
You deduct a specific amount from your taxable income when you claim the standard deduction. The Internal Revenue Service updates that amount each year to keep pace with inflation. How much you get depends on factors such as whether you're married or single, how old you are, whether you're blind and if you're a dependent on someone else's return.
Learn more about how the standard deduction works, how much it is for the 2021 return you'll file in 2022 and when it makes sense to file your taxes using this option.
Defining the Standard Deduction
The standard deduction is an amount the IRS lets you deduct outright from your adjusted gross income to help you reduce your taxable income. You'll pay less in federal income taxes as a result because your tax is a percentage of your taxable income based on your tax bracket.
As an alternative to taking the standard deduction, the IRS will let you do the work of itemizing all your deductions using the Schedule A form instead. That option requires tallying up individual expenses that the IRS allows you to deduct, then using the total amount in place of the standard deduction.
Examples of itemized expenses can include mortgage interest, charitable contributions, theft losses, medical expenses and various types of taxes.
Who Can Take the Standard Deduction?
Almost all taxpayers can claim the standard deduction if they choose to do so. The choice comes down to whether you'd benefit more financially from using this easy option versus itemizing your deductions. If you paid significant medical expenses, property taxes and mortgage interest over the course of the tax year, they could amount to more than your standard deduction.
But the standard deduction is rather large. The Tax Cuts and Jobs Act or TCJA effectively doubled it in 2018, while simultaneously tweaking some itemized deductions downward and eliminating others. Many taxpayers find they come out ahead by claiming the standard deduction while the TCJA remains in effect through the end of 2025.
The IRS does have some restrictions for taxpayers in specific situations where they have no option to take the standard deduction. Both you and your spouse must itemize or claim the standard deduction if you file separate tax returns. One of you can't itemize while the other goes with the standard deduction.
Estates, partnerships and trusts can't take the standard deduction, and neither can many people who are nonresident aliens.
2021 Standard Deduction Amounts
The IRS updates the standard deduction with a small increase each year. The specific amounts depend on the filing status you choose as well as factors such as your age, blindness and your dependency status. The IRS allows a larger deduction for the elderly and those who are legally blind, and a smaller deduction for people who can be claimed as dependents on somebody else's tax return.
The standard deduction amounts for tax year 2021 are $12,550 for single taxpayers and those who file separate married returns, increasing to $25,100 for those who are married filing jointly. This includes some surviving spouses who can claim the filing status of qualifying widow(er). It's $18,800 for heads of household.
Taxpayers who are blind or who are age 65 or older (born before Jan. 2, 1957 for the 2021 tax year) or who are blind are entitled to larger standard deductions for their filing status. A single taxpayer who meets both the age and blindness requirements would have a standard deduction of $15,950 in 2021. The deduction for married taxpayers is based on whether both spouses or just one spouse meets each requirement.
The issue is more challenging, however, for someone who is a dependent. They're entitled to the amount of their earned income plus $350 or $1,100, whichever is greater, but only up to the amount of the standard deduction you would otherwise qualify for if you weren't someone's dependent. Your earned income plus $350 might work out to$12,600, but you'd nonetheless be limited to the $12,550 standard deduction if you're single.
The IRS offers an online tool that can help you determine your standard deduction in more complex tax situations.
The Standard Deduction vs. Itemizing
Claiming the standard deduction can save you a lot of time and hassle, and the generous amounts may work out in your favor and save you more on federal income taxes than itemizing would. You don't have to worry about saving receipts and other documentation to prove your itemized expenses.
But you'd end up paying tax on more income than you have to if all your itemized deductions add up to more than the standard deduction for your filing status. Consider filling out Schedule A to be sure which option shaves the most off your taxable income and offers the most tax savings. You'll notice that line 18 of Schedule A requires that you check a box to indicate that you want to itemize even though the standard deduction you're entitled to would amount to more.
Most tax preparation software programs will help you decide whether the standard deduction makes sense for your tax situation based on the data you input, and some even start with the standard deduction as default because it often makes sense for many taxpayers. This feature gets rid of a lot of the guesswork to ensure you get the highest deduction available.
Taking the Standard Deduction
Claiming the standard deduction is a relatively simple process. Simply enter the standard deduction amount for your tax filing situation on line 12a of your 2021 Form 1040 tax return rather than the total of itemized deductions you arrived at on Schedule A. You don't have to worry about filing Schedule A because you're not itemizing.
- IRS: Topic No. 501 Should I Itemize?
- IRS: IRS Provides Tax Inflation Adjustments for Tax Year 2021
- IRS: How Much Is My Standard Deduction?
- IRS: Schedule A
- IRS: Topic No. 551 Standard Deduction
- IRS: Form 1040
- Tax Policy Center: How Did the TCJA Change the Standard Deduction and Itemized Deductions?
- IRS: Publication 501 Dependents, Standard Deduction, and Filing Information
Ashley Donohoe has written about business and technology topics since 2010. Having a Master of Business Administration degree, bookkeeping certification and experience running a small business and doing tax returns, she is knowledgeable about the tax issues individuals and businesses face. Other places featuring her business writing include Zacks, JobHero, LoveToKnow, Bizfluent, Chron and Study.com.