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Standard vs. itemized: choosing the tax deduction method that's best for you

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Doing your taxes can be a hassle. It's a bit easier when you claim the standard deduction instead of itemizing. (Photo via Unsplash+ in collaboration with Karolina Grabowska)

This weekend, many taxpayers will be working on their 2023 tax returns. They share a couple of traits in addition to simply being eager filers.

The first is no surprise. They are expecting a tax refund.

And second, their tax situations are relatively simple. Typically, they have only wage income that's reported on a W-2 form, and they use the standard deduction instead of itemizing.

The number of individuals who claim the standard deduction has grown since the Tax Cuts and Jobs Act (TCJA) of 2017. That major tax reform bill essentially doubled the standard deduction amounts.

The latest available Internal Revenue Service data, a preliminary analysis of filings for the 2021 tax year, show that 88.4 percent of returns claimed the standard deduction. That's up a bit from the 87.5 percent of returns for tax year 2020 that claimed the standard amounts.

Easy to claim: Even before the TCJA increases, the standard deduction was more popular than itemizing. The main reason is because it's easier to claim.

When you itemize, you must hang onto receipts and do added calculations on another tax form, the Schedule A.

But when you claim the standard deduction, which is based on your filing status, the IRS gives you the amount right on your Form 1040, as show in the excerpt below.

Form 1040 2023 tax return standard deduction amounts
See more tax forms and more about them at Tax Forms 2024.

In case you're reading this on a small mobile screen, here are the standard amounts for most taxpayers younger than age 65 are —

  • $13,850 for single taxpayers and married taxpayers filing separate returns;
  • $20,800 for heads of household filers; and
  • $27,700 for married couples filing a joint tax return and surviving spouses.

With age comes a larger deduction: Now for all y'all sharp-eyed, tax-savvy readers who are wondering about my reference to "taxpayers younger than 65" in the previous section, here's the deal. Age brings a standard deduction bonus.

Older filers, as well as those who are visually impaired, can claim additional standard deduction amounts. This is done by ticking a checkbox (or two or more depending on your marital status) on the line titled "Age/Blindness" a bit earlier on Form 1040 page 1.

Filers age 65 or older or who are legally blind get an added $1,500 per box addition to their 2023 tax return standard deduction.

Again, that's per box checked, so an older married jointly filing couple where each spouse has a visual impairment gets a standard deduction of $37,700. That's a $6,000 increase ($1,500 x four boxes checked) over the basic standard amount for their filing status.

Annual deduction decision: Remember, too, that you get to decide each filing season which deduction method you use. Obviously, you want to use the one that provides you with the larger deduction amount.

So if you have a lot of medical expenses, or are very generous with tax-deductible charitable gifts, one year, you might find itemizing is the better tax deduction choice. Take it.

Then if the next year, the standard amount is more than your itemized amount, then claim the standard deduction.

Annual increases: Another benefit of the standard deduction is that the amounts go up each year based on inflation.

I know you're working on your 2023 return now, and I don't want to overload you with numbers. But when you're ready to think about 2024 taxes, you can find those standard amounts in, Part 2 of my annual tax inflation series: Standard tax deduction amounts get inflation bump for 2024.

The deduction end is near: Finally, note that the larger TCJA standard deduction amounts are temporary.

They, and other tax-saving provisions for individual filers in the tax reform law, will expire at the end of 2025 unless Congress takes action to keep them in place.

You also might find these items of interest:

 

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