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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 2015, the standard deduction is:
Your standard deduction increases if you're blind or age 65 or older. It increases by $1,550 if you're single or head of household and by $1,250 if you’re married or a qualifying widow(er).
About two out of every three returns claim the standard deduction. The standard deduction:
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:
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 37 was more than certain amounts, some of your itemized deductions were limited. For tax year 2015, the limitations apply if your AGI is more than:
To learn more, see Publication 505: Tax Withholding and Estimated Tax.