The standard deduction is the amount of money a taxpayer can subtract from their income that will not be taxed. The amount they can subtract is based on their filing status (i.e. single/married filing jointly/married filing separately/head of household/window with dependent child). Filing status and amount of income determine the tax liability for all taxpayers in the United States. If a taxpayer takes a standard deduction of income tax on their tax returns, they may not itemize any deductions on their tax returns using IRS Schedule A.
The Standard Deduction of Income Tax for 2012:
- Single – $5,950
- Head of Household – $8.700
- Married Filing Jointly – $11,900
- Married Filing Separately – $5,950
- Widow – $11,900
- Dependent – $950-$5,950 (Standard deductions are reduced if a taxpayer is claimed as a dependent on another person’s tax return)
The amount standard deduction of income tax a taxpayer can take has increased every year due to inflation. There are some instances in which a taxpayer may not claim the standard deduction and is required to itemize their deductions. The following instances are cases in which a taxpayer may not take the standard deduction: if the taxpayer is a nonresident or dual-status alien, a person that files for less than 12 months, or if the taxpayer is filing as married filing separately and one spouse itemizes deduction then the other spouse may not take the standard deduction.
The other alternative to taking a standard deduction is to itemize all deduction on an IRS Form Schedule A. Some deductions can be claimed without itemizing deductions, but some deductions require that an IRS Schedule A be submitted with all itemized deductions. When a taxpayer completes a Schedule A, they may find out that they may benefit from the standard deduction based on their filing status more than then itemizing all their deductions.
By incorrectly taking the standard deduction when a person is ineligible or itemizes deductions incorrectly, they may run into tax debt issues. If the IRS processes tax returns and does not agree with the deductions, they will send the taxpayer a bill for the difference in taxes paid and the taxes still owed according to their calculations. Any disputes may be appealed by the taxpayer, but they must be done before the IRS takes collection actions. If you have more questions about standard deductions, contact a tax professional today for a free consultation.