Standard Deduction vs. Itemized Deductions in header of articles
Standard Deduction vs. Itemized Deductions
You can either claim the standard deduction or itemize your deductions -- whichever lowers your tax the most.
The standard deduction is a fixed dollar amount that reduces the income you’re taxed on. Your standard deduction varies according to your filing status. In 2012, the standard deduction is:
For single or married filing separately -- $5,950
For married filing jointly or qualifying widow(er) -- $11,900
For head of household -- $8,700
Your standard deduction increases by $1,200 if you're blind or age 65 or older. It increases by $1,500 if you're single and not a surviving spouse.
About two out of every three returns claim the standard deduction. The standard deduction:
Allows you a deduction even if you have no expenses that qualify for claiming itemized deductions
Eliminates the need to itemize deductions, like medical expenses and charitable donations
Lets you avoid keeping records and receipts of your expenses in case you're audited by the IRS
Itemized deductions also reduce your taxable income. Ex: If you're in the 15% tax bracket, every $1,000 in itemized deductions knocks $150 off of your tax bill.
You might benefit from itemizing your deductions on Form 1040, Schedule A if you:
Have itemized deductions that total more than the standard deduction you’d receive
Had large, uninsured medical and dental expenses
Paid mortgage interest and real estate taxes on your home
Had large, unreimbursed expenses as an employee
Had a large, uninsured casualty (fire, flood, wind) or theft losses
Made large contributions to qualified charities
Had large, unreimbursed miscellaneous expenses
However, your itemized deductions might total less than your standard deduction. If so, you can still itemize deductions rather than claim the standard deduction. You might want to do this if you'd pay less tax. This can happen if you itemize on your state return and get a larger tax benefit than you would if you claimed the standard deduction on your federal return.
If your adjusted gross income (AGI) from Form 1040, line 38 was more than certain amounts, some of your itemized deductions were limited. For tax year 2012, the limitations apply if your AGI is more than:
$300,000 if married filing jointly or qualifying widow(er)
$275,000 for head of household
$250,000 for a single taxpayer
$150,000 if married filing separately
To learn more, see Publication 505: Tax Withholding and Estimated Tax.