What is the standard deduction vs. itemized deduction?

You can claim the standard deduction or itemized deductions to lower your taxable income. The standard deduction lowers your income by one fixed amount. On the other hand, itemized deductions are made up of a list of eligible expenses. You can claim whichever lowers your tax bill the most.

The article below outlines how standard and itemized deductions work for the 2017 tax year. Tax reform passed at the end of 2017 may impact whether you claim the new standard deductions or claim itemized deductions for tax year 2018 and beyond.

Standard deduction

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 2017, the standard deduction is:

  • For single or married filing separately — $6,350
  • For married filing jointly or qualifying widow(er) — $12,700
  • For head of household — $9,350

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:

  • 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

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 would receive
  • Had large, out-of-pocket 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 federal and state returns and get a larger tax benefit than you would if you claimed the standard deduction on your federal and state returns.

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 2017, the limitations apply if your AGI is more than:

  • $313,800 if married filing jointly or qualifying widow(er)
  • $287,650 for head of household
  • $261,500 for a single taxpayer
  • $156,900 if married filing separately

To learn more, see Publication 505: Tax Withholding and Estimated Tax.

Questions about Claiming Itemized vs. Standard Deduction

Have additional questions about whether to claim itemized deductions or the standard deduction? Our Tax Pros speak the tricky language of taxes and are committed to helping you better understand your taxes.

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