A standard deduction is an amount the IRS allows a taxpayer to subtract from his taxable income based on filing status. As of tax year 2014, the standard deduction for an individual filer was $6,200, while for married couples filing jointly, $12,400 was the standard deduction.Continue Reading
An additional filing designation is head of household. For this tax designation, the IRS allowed a standard deduction of $9,100 in 2014. The amount of the deduction is adjusted annually based on inflation.
Tax filers have a choice between accepting the standard deduction or itemizing deductions for a given year. Itemizing means listing actual allowable deductions, such as mortgage interest and property taxes. While claiming the standard deduction is the simplest approach, itemizing often leads to a larger total deduction. Keeping receipts and organized records of itemized deductions during the year allows for simple comparison and easier tax reporting. Charitable contribution and home ownership deductions are some of the common deductions that make itemizing sensible.
When a person takes the standard deduction, that amount is subtracted from gross income to calculate adjustable gross income, or taxable income. A couple filing jointly with gross income of $84,000 and the standard deduction of $12,400 has taxable income of $71,600, for instance.Learn more about Taxes