Site icon Blog

What Is the Standard Tax Deduction for 2023 – 2024?

What Is the Standard Tax Deduction for 2023 – 2024?

The Standard Deduction is a fixed dollar amount that reduces the amount of income you get taxed on. 

Think of it as tax-free income that you get to keep before taxes are applied to the rest.

The amount you can claim as your Standard Deduction is affected by factors such as your filing status and age.

The amount of the Standard Deduction is as follows:

You then add an additional standard deduction if you were born before January 02, 1959 or if you were blind as of the end of the year.

For example, in the tax year 2023, if you’re single and 65+, you can add an extra $1,850 to your Standard Deduction, bringing up the total to $15,700. And for 2024, the additional Standard Deduction for single seniors (65 +) bumps up to $1,950, making for a total Standard Deduction of $16,700.

If you are a dependent and someone else is claiming you on their tax return, such as a parent, then your Standard Deduction is limited to $1,250 or your earned income for the year plus $400, not to exceed the Standard Deduction amount. 

For the purposes of the Standard Deduction, earned income means salaries, wages, tips, and any fees you receive for the work that you do. This is different than unearned income, which would be returns from investments or interest income.

Understanding this important deduction can help you make the most out of every tax savings opportunity when filing your tax return.

What are the advantages of taking the Standard Deduction?

Most people can claim the Standard Deduction, regardless of their expenses. You can take the Standard Deduction on your tax return if you don’t have enough expenses to itemize your deductions.  Expenses for these purposes include mortgage interest or charitable donations.

You can claim the Standard Deduction without needing to track or document specific expenses.

The amount varies depending on your filing status and is adjusted annually by the IRS for inflation.

Who isn’t eligible for the Standard Deduction?

Most people can take advantage of the Standard Deduction to lower their tax bill, but there are a few cases when you can’t.  

They are as follows:

The Standard Deduction vs. Itemized Deduction

When it comes to reducing your taxable income, you have the option of taking either the Standard Deduction or itemized deductions each year.

Itemized Deduction:

Itemized deductions let you take into account specific expenses you incurred during the year.  Things like mortgage interest, property taxes, medical bills, and charitable donations. 

But keep in mind when you itemize: you’ve got to keep track of all these expenses throughout the year and have the receipts to prove them.

Itemizing can sometimes lead to bigger tax savings, especially if you’ve got some large deductible expenses. 

To claim itemized deductions, you’ll need to fill out a Form Schedule A.

Examples of itemized deductions 

Common itemized tax deductions include mortgage interest, charitable contributions, and state and local taxes paid. If your itemized deductions are greater than the Standard Deductions, you’ll want to itemize your tax deductions. 

To Summarize:

The standard vs. itemized decision is easy when you understand the criteria. 

Here’s what to consider: 

It’s typically best to take the Standard Deduction when:

It’s usually better to itemize deductions when:

Remember: TurboTax will determine which deduction is best when you enter all of your potential deductions. If you don’t see your deductions mentioned on your tax return, it is probably because the Standard Deduction exceeded the total of your itemized deductions.

Exit mobile version