Your standard deduction, that is. Your standard deduction is the amount that can be deducted from your income if you do not have enough itemized deductions (keep tuning in to The Tax Bleep to learn all about Schedule A and itemized deductions). This number goes on Line 40 of Form 1040. The standard deductions are as follows:
Filing Status Standard Deduction
Single, Married Filing Separately $6,200
Married Filing Jointly $12,400
Head of Household $9,100
Not everyone will use schedule A because sometimes the standard deduction is higher than all of the amounts you spend on other deductions combined. For instance, a single person who has no children, is a renter, and is fairly healthy, might spend $200 out of pocket for medical expenses the whole year, and pay no property taxes or mortgage interest (which tend to be the biggest deductions). That person’s itemized deductions would not even total $1,000. Therefore, the standard deduction of $6,200 for a person with a filing status of “single” would be the most beneficial option.
If you are a dependent, however, your standard deduction may change. This is relevant for many young people who are supported by their parents throughout college. The minimum standard deduction would be $1,000 for that dependent person. Here is an example of how your standard deduction might change:
Bobby is a sophomore at A+ University. He has a part-time job, but his parents provide most of his support so he is claimed as a dependent on their return. If Bobby makes more than a certain amount of money in a year, he is required to file a tax return, but even if he is not required to file, he may still want to in order to receive a refund of some of the federal tax withheld from his paycheck. In 2014, Bobby made $400 during the year. Add $350 to his wages for a total of $750. Since this number is less than the minimum standard deduction of $1,000, he would take a standard deduction of $1,000.
However, say Bobby made $1,000 of income during 2014. Add $350 to this for a total of $1,350. This number is greater than $1,000 but less than the standard deduction of $6,200 for a single person. Therefore, Bobby would take $1,350 as his standard deduction.
The standard deduction would also veer from the normal standard deduction if you are blind and/or were born before January 2, 1950. This date will change each year. See an alternative worksheet if either of these apply to you.
Continue tuning into The Tax Bleep to learn when it is better to itemize your deductions instead of taking the standard deduction. Have a great week!