Standard Tax Deduction in 2022–2023 and When to Claim It
The standard deduction for 2022 is $19,400 for heads of household, $12,950 for single filers, and $25,900 for joint filers.
Your taxable income is decreased by a set dollar amount known as the standard deduction. The standard deduction for joint filers in 2022 is $25,900. Heads of household get $19,400, and single filers and people who are married but filing separately get $12,950.
The standard deduction will rise to $27,700 for joint filers. $20,800 for heads of household, and $13,850 for single filers and those who are married but filing separately for 2023 (taxes due in 2024).
How to Use the Deduction
The IRS gives you the standard deduction without asking any questions. Even if you don’t have any other allowable deductions or tax credits. The amount of income you must pay taxes on is decreased by the standard deduction.
On your tax return, you can only choose to itemize or take the standard deduction. IRS-allowed costs called itemized deductions can lower your taxable income.
If you choose the standard deduction, you cannot deduct your house mortgage interest or any of the other widely used tax deductions. Such as charitable contributions and medical costs. (However, if you itemize, keep track of the documents that prove your deductions in case the IRS decides to audit you.)
If someone may claim you as a dependent on their tax return, your standard deduction is decreased.
If you are over 65 or blind for the 2022 tax year, you can increase your standard deduction by $1,400. And if you are also single and do not have a surviving spouse, the amount increases to $1,750. These two new standard deduction levels will rise by $100 to $1,500 and $1,850, respectively, for the 2023 tax year.
Use of the Standard Deduction
You should undoubtedly itemize your deductions and save money if your standard deduction is less than your actual deductions. It can be worthwhile to take the standard deduction and save some time if it exceeds your itemized deductions.
Test it out right now. Although taking the standard deduction is simpler than itemizing, it may be worthwhile to do so if you have a mortgage or home equity loan. Utilize the figures on IRS Form 1098 and the Mortgage Interest Statement (you typically get this from your mortgage company at the end of the year). Compare the standard deduction to the amount of your mortgage interest deduction. If you itemize, you may also deduct property taxes, state income taxes, sales taxes, and charitable contributions.
Calculate the results both ways. It’s generally worthwhile to take the time to respond to all the itemized deductions-related questions that might be relevant to you if you’re utilizing tax software. Why? Your return can be processed both ways by the software (or a tax expert at Your Part Time Accountant) to determine which results in a lesser tax bill. Even if you decide to use the standard deduction, at least you’ll be aware of your financial advantage.