Standard Deduction

We American taxpayers have choices when it comes to paying our taxes. We can’t choose if we want to pay taxes, but we can choose how much we deduct each year from our taxable income. That’s right: we get a tax deduction just for being a taxpayer. Isn’t that amazing? Anyway, we get to choose between two very exciting options: claiming itemized deductions or claiming the standard deduction.

The “standard deduction” is a fixed amount we can deduct from our federal income taxes. It goes against our taxable income and can reduce our tax debt by a pretty significant amount. In 2019, the standard deduction for a single taxpayer, or for someone married but filing separately, was $12,000. So if Kurt is a single dude making $85,000 a year, he can reduce that by $12,000 come tax time, which means he only has to pay taxes on $73,000.

Now if Kurt and his girlfriend Goldie tied the knot and decided to file a joint return, the 2019 standard deduction for married joint returns was $24,000. For heads of households, it was $18,000. This is not chump change here, which is why most folks choose the standard deduction over the more complicated process of itemizing deductions. Are there details and nuances and hidden potential complexities to this whole standard deduction thing? Of course there are; this is the IRS we’re talking about. But by and large, if we file federal income taxes, we’re eligible to take advantage of that hefty standard deduction.