A standard deduction is a deduction that reduces the amount of income subjected to taxes and is available to nearly everyone who files income taxes in the United States. Generally, taxpayers have the choice of taking either the standard amount or itemizing their deductions. A number of expenses may be subjected to itemization that would reduce the amount of income subjected to taxation even more so than the standard, but whether an individual should itemize depends solely on the circumstances involved.
According to the Internal Revenue Service, most taxpayers use the standard deduction amount. It is definitely an easier option, though some people may be paying more money than they need to to the IRS by choosing this method. Still, some choose convenience over reduced tax obligations. Choosing this option means that there is no need to add, keep track of receipts, and try to justify every expense as one that should be itemized.
The key to determining whether to take the standard amount or whether to itemize is first to determine whether the standard deduction amount is greater than itemization would be. For most people, the standard makes the most sense. Couples can take more than $10,000 US Dollars (USD), and the amounts can be adjusted annually. If an adjustment does take place, it is because the amount is increased.
When choosing between standard and itemized deductions, it is necessary to look at which expenses may be included in itemization. Interest on home mortgages can be, as can medical expenses, once they reach a certain percentage of income. A number of other miscellaneous, work-related expenses can also be deducted.
The benefit of taking the standard deduction are many. First, there is no worrying about what may or may not qualify. Second, there is a considerable time savings. Third, taxpayers can often save the expense of having a tax return professionally prepared. Returns that use this option also are less likely to be audited.
It should also be remembered that a standard deduction is higher for some senior citizens or those who are disabled. This may also play a role in which a deduction is taken. Some may forget this is an additional deduction added on to the standard amount and therefore pay a higher amount of tax than is necessary.
