When you file your taxes, deductions reduce your income and the amount you owe. Taxpayers have two choices: They can claim a standard deduction or they can itemize and claim specific deductions they're entitled to.
The standard deduction is a flat rate based on your filing status -- and it increased from 2019 to 2020.
Before you file your 1040 form this upcoming tax season, you need to know what the new standard deduction is for 2020 so you can decide whether claiming it provides you with more tax savings than itemizing would.
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How much is the standard deduction increasing in 2020?
The table below shows how much the standard deduction is going up in 2020, depending on your tax filing status.
|
Tax Filing Status |
2019 Standard Deduction |
2020 Standard Deduction |
Increase in the Standard Deduction in 2020 |
|---|---|---|---|
|
Single or married filing separately |
$12,200 |
$12,400 |
$200 |
|
Head of household |
$18,350 |
$18,650 |
$300 |
|
Married filing jointly or qualifying widow(er) |
$24,400 |
$24,800 |
$400 |
Data source: IRS.
This means the standard deduction will increase between $200 and $400 in 2020 depending on your filing status.
Should you claim the standard deduction?
Taxpayers have to choose between claiming the standard deduction or itemizing and claiming specific deductions they're entitled to -- they can't claim both.
You should claim the standard deduction if the amount you can deduct, based on your filing status, is equal to or greater than the combined value of all of your itemized deductions.
To do this calculation, you need to know what itemized deductions you'd be eligible to claim. Some common examples of itemized deductions include:
- Mortgage interest (on mortgages up to $750,000 for mortgages obtained after Dec. 15, 2017, or mortgages up to $1 million for mortgages obtained prior to that date)
- Charitable contributions
- Up to $10,000 in state and local taxes paid
- Medical expenses exceeding 10% of your income (for 2019 and 2020)
If the value of your itemized deductions exceeds the standard deduction, it makes sense to itemize so you can get a bigger tax break. You can check out a list of tax deductions here to make sure you don't miss any when deciding if itemizing makes sense for you.
Remember, though, there are some deductions you can claim regardless of whether you itemize or claim the standard deduction. Examples include a deduction for IRA contributions or student loan interest. So don't factor these in when deciding whether itemizing makes sense because you can claim them no matter which option you choose.
Now you know how much the standard deduction will be in 2020
Knowing how much the standard deduction will be allows you to make an informed choice when filing your taxes. You can use the new numbers for the 2020 tax year to see whether you should itemize or not. It's worth doing the math because you don't want to pay a larger bill to the IRS than you have to.
