What’s The Difference Between The Standard And Itemized Deduction?
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What is the standard deduction?
Each year you file your taxes, the IRS allows you to subtract a standard dollar amount to reduce your taxable income. The lower your taxable income, the less you’ll need to pay. For 2022, the standard deduction is $12,550 for single filers, $25,100 for those filing jointly, and $18,800 for heads of household.
Married Filing Jointly
Married Filing Separately
Head of Household
Should I take the standard or itemized deduction?
You should take whatever one is bigger! The bigger the deduction, the less you’ll pay in taxes.
What’s the difference between the standard and itemized deduction?
The standard deduction is, well, the standard amount the IRS allows you to subtract from your taxable income.
For example, if I am single filer and made $32,550 this year, my taxable income would be $20,000 after subtracting the $12,550 standard deduction.
Itemized deductions are qualifying expenses you had during the year that you can subtract from taxable income. Dozens of qualifying expenses exist, but some include home mortgage interest, medical expenses, and charitable donations. If your itemized deductions are more than the standard deduction, you should itemize since it can save you money.
For example, if I am single filer and made $33,800 this year, and my itemized deductions were $18,800, my taxable income would be $15,000 after subtracting itemized deductions.
Some companies charge more to Itemize Deductions
If you’re looking to itemize and don’t want to pay more, consider using FreeTaxUSA. Their federal tax return is completely free and includes the forms needed to itemize.
How do I know which deduction is better or bigger?
Most online software will recommend the standard or itemized deduction based on the information you provide. Remember, it’s their job to get you the biggest refund possible.