Did You know Standard Deductions Are Increasing In 2020?

When you file tax returns, deductions reduce your income and the amount you owe. Taxpayers have two options: they can claim a standard deduction, or they can specify and request specific deductions to which they are entitled.

The standard deduction is flat based on marital status and increased from 2019 to 2020.

Before submitting Form 1040 this tax season, you need to know the new implied deduction for 2020 to decide if claiming offers more tax savings.

In 2019, the amount was $ 12,200 for single and married taxpayers who reported filing a separate entry, $ 24,400 for married persons who filed a joint return, and $ 18,350 for heads of household. But, it is expected to be more higher this year.

The standard deduction reduces your taxable income. In 2019, the standard deduction was $ 12,200 for single and married filers who filed separately, $ 24,400 for joint declarations, and $ 18,350 for heads of household.

This year 2020, the standard deduction will be $ 12,400 for single and married filers (with separate returns), $ 24,800 joint declarations, and $ 18,650 for heads of household.

How Standard Deduction Works

• Even if there are no other eligible deductions or tax credits, the IRS allows you to make the standard deduction without asking questions. The standard deduction reduces the amount of income with which taxes are paid.
• You can make the standard deduction or specify the item in the tax return; however, you cannot do both. Itemized deductions are essential expenses authorized by the IRS, which can reduce taxable income.
• Making an implied deduction means that you cannot deduct interest on your mortgage or that you can make many other popular tax deductions, such as medical bills or charitable donations, for example. But if you go into detail, you should keep records that support your deductions if the IRS decides to verify you.

When to claim the Standard deduction

Here's the bottom line: if the standard deduction is less than itemized deductions, you probably need to itemize and save money. If the standard deduction is higher than the specific deductions, it may be useful to accept it and save time.

• Try this quick review

While using the standard deduction is more straightforward than the itemized, if you have a mortgage or equity loan, it's worth seeing if the details will save you money. Use the numbers on IRS 1098, the Declaration of Interest on Mortgage Loans (you usually get it from your mortgage company at the end of the year). Compare the value of the mortgage interest deduction with the standard deduction. Property taxes, state or sales taxes, and charitable donations may also be deductible if detailed.

• Run the numbers back and forth

Consult a tax expert; it is probably worth answering any detailed questions about the deduction that may apply. The tax specialist can go back and forth to see which method generates a lower invoice. Even if you finish the standard deduction, at least you will know that you are ahead.

• Do not assume that no details will be given

The fact that the standard deduction has increased is favorable for taxpayers. But don't reject the idea of detailing why you are entitled to a higher standard deduction by 2020. If your eligible expenses increase (for example, because you buy a house or move to a more elevated tax location) The details can put more money in your pocket, so you'll need to see what your expenses will look like next year before making this decision.

You know to what extent the standard deduction will allow you to make an informed decision when filing taxes. You can use the new figures for the fiscal year 2020 to see whether you should download or not. It's worth doing the math because you don't want to pay a higher IRS bill than you have to pay.