Most taxpayers are familiar with the terms standard deduction and itemized deductions, but many are unaware of the differences between the two.
A standard deduction is a fixed dollar amount based on the taxpayer’s filing status, age, and disability (blindness). Below are the standard deduction amounts for 2019, as released by the IRS:
Single - $12,200
Married Filing Joint - $24,000
Married Filing Separate - $12,200 (or $0, if spouse itemizes)
Head of Household - $18,350
Married taxpayers over age 65, or who are blind, are granted an additional $1,300. While unmarried taxpayers over age 65, or who are blind, are granted an additional $1,650.
Itemized deductions are reported on Schedule A and include medical expenses, real estate taxes, state and local taxes, gambling loses (limited to gambling winnings), donations to charity, and more. If your itemized deductions for the year exceed the amount of your standard deduction, you may elect to itemize instead. An exception for this rule exists for taxpayers who file Married Filing Separate (MFS). In this case, if one spouse itemizes, the other spouse must itemize as well.
Taxpayers can take the standard deduction or itemize by filing Schedule A, but not both. For many taxpayers, the standard deduction may be the best choice, as their itemized deductions for the year may not exceed the standard deduction amount for their filing status (except in the case of MFS, as mentioned above).
For example, in 2019, if you’re a single taxpayer under age 65, and not blind, you would be allowed a standard deduction of $12,200. If you tally up all of your allowable expenses for the year (i.e. Medical expenses, charitable contributions, home mortgage interest, etc.) and they exceed $12,200, it may be in your best interest to itemize.