How to Calculate a Standard Deduction for Federal Income Taxes

Although the tax code can be aggravatingly complex and completing a tax return may be quite frustrating, a few rules benefit you by protecting income from taxation. You can list specific deductible expenses, or simply take a flat amount of your income off the table for tax purposes. Claiming this standard deduction is a straightforward, two-step process.

Filing Status

The standard deduction is a dollar amount subtracted from your adjusted gross income. The amount of the standard deduction changes each year, and by 2015 had reached $6,300 for taxpayers filing as single, and $12,600 for married couples filing joint returns. If you're filing as head of household, the standard deduction in 2015 was $9,250. The amount remains the same no matter what tax bracket you're in.

Claiming the Standard Deduction

The first steps in completing Form 1040, the annual federal tax return, involve adding up the income for the year, and making any adjustments to that income such as student loan interest, and individual retirement account contributions. Once you have adjusted gross income entered on lines 37 and 38, enter the amount of your standard deduction on line 40. You then subtract the amount on line 40 from line 38. The result on line 41 is further reduced by your exemption amount to get taxable income on line 43.

Alternative Form 1040s

The IRS provides simplified forms for some taxpayers with relatively simpler tax profiles. If your income is less than $100,000 and comes only from wages, interest, dividends, capital gains and/or pensions, you can use Form 1040A, where the standard deduction appears on line 24. The 1040EZ is for single or married taxpayers younger than 65, with no dependents, income of less than $100,000, and interest income of less than $1,500. On that form, the standard deduction is combined with the exemption amount on Line 5. Although the standard deduction is the same no matter what form you use, only Form 1040 allows you to itemize your deductions instead.

To Itemize or Not to Itemize

The tax rules allow you to itemize deductions instead of taking the standard deduction. To do so, use Form 1040 and list the deductions on Schedule A. Deductible expenses include unreimbursed employee expenses, property taxes, mortgage interest, charitable gifts, casualty and theft losses, and medical expenses you paid that were not covered by insurance and that exceed a specified percentage of your adjusted gross income. If the total of your itemized deductions don't match or exceed the amount of the standard deduction, you're better off skipping Schedule A and just using the standard deduction. In addition, itemized deduction amounts start to phase out for single filers above with an adjusted gross income above $258,250, and for married filers above $309,900.

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