A deduction reduces the amount of a taxpayer's income that's subject to tax, generally reducing the amount of tax the individual may have to pay. Most taxpayers now qualify for the standard deduction, but there are some important details involving itemized deductions that people should keep in mind.
The standard deduction is a specific dollar amount that reduces the amount of taxable income. The standard deduction consists of the sum of the basic standard deduction and any additional standard deduction amounts for age and/or blindness.
In general, the IRS adjusts the standard deduction each year for inflation. It varies by filing status, whether the taxpayer is 65 or older and/or blind and whether another taxpayer can claim them as a dependent.
Taxpayers cannot take the standard deduction if they itemize their deductions. Taxpayers can refer to Topic No. 501, Should I Itemize?, for more information.
Some taxpayers choose to itemize their deductions if their allowable itemized deductions total is greater than their standard deduction. Other taxpayers must itemize deductions because they aren't entitled to use the standard deduction.
Taxpayers who must itemize deductions include:
Taxpayers use Schedule A (Form 1040 or 1040-SR) to figure their itemized deductions. In most cases, their federal income tax owed will be less if they take the larger of their itemized deductions or standard deduction.
Taxpayers can review the instructions for Schedule A (Form 1040), Itemized Deductions, to calculate their itemized deductions, such as certain medical and dental expenses, and amounts paid for certain taxes, interest, contributions and other expenses. Taxpayers may also deduct certain casualty and theft losses on Schedule A.
The Interactive Tax Assistant (ITA) provides answers to tax law questions based on a taxpayer's individual circumstances. It can help a taxpayer determine the answer to common questions, such as if they:
The ITA can help taxpayers with these deduction-related questions: