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Each year when you file your federal income tax return, you can take the standard deduction or deductions. Few people find it worthwhile to itemize anymore, because the amount of the standard deduction was freed up in the big tax overhaul of 2017. Now, the IRS is making the standard deduction bigger, to accommodate the increase in the highest cost of living in a decade.

What is the cost of the standard deduction on the 2022 and 2023 tax returns? This depends on your filing status, age, whether you are blind and whether other taxpayers can claim you as a dependent.

What is the standard deduction for 2022 and 2023?

The IRS recently released new tax rates and standard deduction rates for the 2023 tax year, meaning your return will be due in 2024. Here are the standard deduction rates for 2022 and 2023 available to most taxpayers.

How does the Standard Deduction work?

Standard deductions are the easiest way to reduce taxable income on your tax return. Instead of tracking actual expenses, keeping receipts and filling out additional tax forms, you simply claim flat dollar amounts determined by the IRS.

There are many expenses you can claim as an itemized deduction, including out-of-pocket medical expenses, state and local taxes, mortgages and charitable contributions.

To correct the cancellation, you must keep a receipt or other document proving that you spent the money.

Itemizing or claiming standard deductions reduces your taxable income. For example, if you pay a single tax and earn $75,000 in 2022, taking the standard deduction of $12,950 will reduce your taxable income to $62,050.

In general, the standard deduction is available to anyone who does not itemize, although there are exceptions. You can’t claim the standard deduction if:

  • You are married and separated from your spouse who files deductions
  • You were a nonresident alien or a dual-status alien during the fiscal year
  • You file a return for less than 12 months due to a change in accounting period
  • You invest in an estate or trust, mutual fund, or partnership

Can Itemizing Save Money?

For some people, claiming the standard deduction lowers their tax bill. However, about 90% of taxpayers choose to claim the standard deduction.

This was not always the case. Before President Donald Trump signed the 2017 tax law, about 30% of taxpayers were reduced. But the interim law increased the standard deduction — nearly doubling it for all filing statuses. It also eliminated or limited several itemized deductions, including:

  • Itemization of the deduction for state and local taxes (SALT) of $10,000
  • Limitation on the interest deduction for interest paid on up to $750,000 of mortgage debt (up to $375,000 if married separately)
  • Cancellation of unpaid employee expenses

As a result, fewer people are benefiting from labeling things — a situation that could remain until the provisions of the 2017 tax reform expire on December 31, 2025, or Congress makes changes sooner.

What is the additional standard deduction?

Taxpayers who are 65 or older or blind can claim an additional standard deduction, an amount added to the standard deduction for their filing status.

Navigating the value of the additional standard deduction can be confusing. The IRS’s instructions for the 2022 Form 1040 tax year include a table to help you calculate the standard deduction you’re allowed based on when you (and your spouse, if applicable) were born and if you’re considered legally blind. you and your wife.

Let’s look at two examples of how the additional common deduction works.

Example 1: Jim and Susan are a couple who file returns together. The couple is over 65 years old. Susan is blind; Not Jim.

For 2022, they will receive the standard deduction of $25,900 for a filing spouse. They also get an additional standard deduction of $1,400 per person over the age of 65. As a result, the 2022 standard deduction is $30,100: $25,900 + $1,400 + $1,400 + $1,400.

On their return in 2023, assuming no change in their marital status or finding, Jim and Susan’s standard deduction is $32,200. That’s the 2023 standard deduction of $27,700 for married taxpayers filing a joint return, plus three additional standard deductions of $1,500 each.

Example 2: Ellen is single, over 65, and not blind. For 2022, he will get the standard deduction of $12,950, plus an additional standard deduction of $1,750 for being a single filer over age 65.

For 2023, if nothing changes, Ellen’s standard deduction is $15,700: the 2023 standard deduction of $13,850 for a single filer, plus an additional standard deduction of $1,850 for those over 65 .

IRS Definition of the Blind

To claim the additional standard deduction for blindness, you (or your spouse, if applicable) must be totally blind at the end of the tax year or receive a certified statement from an expert. the eye or optometrist says that:

  • You can’t see better than 20/200 with your better eye with glasses or glasses.
  • Your field of vision is 20 degrees or less

Standard deduction for dependents

If another taxpayer can claim you as a dependent, your standard deduction is limited. For 2022, the standard deduction for dependents is limited to the greater of $1,150 or your earned income plus $400 — but the total cannot exceed the standard deduction available for of your shipping status.

For 2023, the limit is $1,250 or your income plus $400, whichever is greater. But again, the amount cannot be greater than the standard itemized deduction available for your writing status.

For example, say Sarah is a college student who is dependent on her parents and earns $15,000 from a part-time job in 2022. When she files her taxes in 2022, the standard deduction for Sarah will be older than:

  • $1,150
  • $15,400 ($15,000 in gross income plus $400)

The more obvious amount is $15,400. However, because his standard deduction cannot be greater than the standard itemized deduction available in his filing status—in this case, single—the standard itemized deduction for 2022 is $12,950.

Now, let’s say that in 2023, Sarah works less, so her income will be only $10,000. His standard deduction is the greater of:

  • $1,250
  • $10,400 ($10,000 in earnings plus $400)

Sarah’s standard deduction for 2022 is $10,400 because it is less than the standard deduction available for her filing status ($13,850 in 2023).

Claiming the standard deduction is often the easier way to do your taxes, but if you have multiple deductions, add them up and compare them to the standard deduction for your filing status. Most of the best tax filing software will help you do this. If you have enough deductions, it may be a more profitable route during the upcoming tax season.

Compare the best tax software in 2022

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