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What Is a Standard Deduction?

On federal income tax forms, the standard deduction reduces tax liability by a set amount, based on filing status. Unlike itemized deductions, taxpayers don’t have to prove their expenses for the year in order to claim it.

Standard Deduction Amounts

For the tax year 2016, the IRS lists the standard deduction for heads of household at $9,300, an increase of $50 from 2015. There is no change for single or married filers. The standard deduction for married filing jointly is $12,600, and single or married filing separately taxpayers can claim $6,300 each. Qualified widows or widowers may also claim a $12,600 deduction.

Additional Standard Deductions

Blind or Elderly Taxpayers

Taxpayers who are blind or over the age of 65 may claim additional deductions. Single filers can claim an extra $1,550 for the 2015 and 2016 tax years. For married filing jointly taxpayers, the additional amount increases from $1,200 in 2015 to $1,250 in 2016.

Dependents

Taxpayers with dependents may take an extra deduction of $1,050. The amount is the same for both years. A dependent is a qualifying child or relative who lives with you. There is no maximum number of claimable dependents. However, spouses may not claim their husband or wife as a dependent.

Note that a dependent can’t be claimed twice. In cases of legal separation or divorce, custody papers often stipulate who may claim certain dependents. If legal documents don’t spell out these stipulations, the parent the child lives with most of the time receives the deduction.

Federal Disaster Survivors

Anyone who lived in a federally declared disaster area during 2015 may increase their standard deduction by the amount of casualty or loss they suffered that year. In this case, documentation such as a police report or insurance claim is required to prove the loss. Tax relief for disaster victims may not be limited to this amount. Contact the IRS to determine whether you are eligible for these special credits and deductions.

Standard Deduction Limits

Not everyone may take the standard deduction. If you were claimed as a dependent on someone else’s tax return, you may claim the greater of $1,000 or your income for the year plus $350. The larger amount is capped at $6,300, the standard deduction for single taxpayers.

If you and your spouse file separate returns, you must both choose the same deduction method. If one spouse itemizes deductions, the second spouse can’t claim the standard amount.

Finally, nonresident and dual status aliens aren’t allowed to take standard deductions. They must itemize instead. Dual status aliens are foreigners who have lived in the US under both resident and nonresident status in the same year.

Pros and Cons of Standard Deductions

Since it is a preset amount, using the standard deduction can drastically reduce the amount of time needed for tax preparation. It also reduces the amount of paperwork needed. Taxpayers don’t need to fill out Schedule A in addition to form 1040 with a standard deduction. There are fewer receipts to keep as well.

However, forgoing itemized deductions may also result in paying more taxes than necessary. Mortgage interest, college tuition, medical bills, job-related expenses, and more can be itemized and deducted. Itemizing may be a smarter choice for Individuals who have significant deductible costs during the year.

Determining Which Method to Use

The IRS recommends calculating tax liability both ways to determine which is more useful. Most tax preparation software handles this choice for you. Although they are thorough, tax prep programs may not take advantage of every credit or deduction that tax law provides. Taxpayers who have several expenses to consider or an unusual year may be better off with professional assistance.

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