The Standard Deduction for 2023 was $13,850 for single filers and $27,700 for married filing jointly. For 2024 those numbers will adjust to $14,600 and $29,200 respectively. If the amount on your 2023 return matches one of these numbers, you likely took a standard deduction for the year. You also might NOT see a Schedule A attached to your 1040 return.

What exactly IS a standard deduction? We regularly have conversations with clients about how they can deduct their mortgage interest, real estate and other taxes paid, donations, or certain health expenses. These deductions all get broken down Schedule A on your tax return. If that amount is less than the Standard Deduction amounts above, then you get to take the standard deduction amount (higher) which is a GOOD thing for you. It is reported that around 90% of tax payers are taking the Standard Deduction amount since the Tax Cuts & Jobs Act passed in December of 2017 (Tax Policy Center). You would NOT want to see a number on line 12 that is less than the Standard Deduction for your current year. If that number is GREATER than the Standard Deduction amount, you should have a Schedule A on your tax return showing you a breakdown of the expenses that were included in your deduction amount. 

This is important because there are decisions that can be made when it comes to taking a Standard Deduction versus Itemizing. For example, if you give money to charity and are taking the Standard Deduction, you could consider lumping a couple of years together and using an Itemized Deduction for the current year to lower your taxable income. It also matters when we talk about “keeping a mortgage to get the write-off.” In most cases (As referenced above) that deduction does not actually count as you are likely just taking the Standard Deduction. Do not let your taxes drive your life decisions, but certainly be aware of them.

Next up: The IRS is benefiting from you growing your pre-tax bucket…

Disclosures

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.