standard deduction

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Standard deduction

The IRS-specified amount by which a taxpayer is entitled to reduce income an alternative to itemizing deductions.
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Standard Deduction

In American tax law, the portion of an individual's or couple's income that is not taxed. The standard deduction is taken after computing the adjusted gross income. Taxpayers have the option of choosing between the standard deduction and making itemized deductions, based on medical expenses or local taxes paid. Itemized deductions may or may not result in a larger percentage of income that is tax free, and taxpayers usually take the larger deduction. The amount in the standard deduction varies from year to year, depending on inflation and a person's filing status. However, it is higher for persons over age 65 and blind persons.
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standard deduction

The minimum deduction from income allowed a taxpayer for calculating taxable income. Individuals with few itemized deductions elect the standard deduction in place of itemizing deductions. Formerly called zero bracket amount.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
Brad and his wife Dee will take the $24,400 standard deduction on their joint tax return in 2019, so they will not itemize.
As of the end of 2017, The District of Columbia, Idaho, New Mexico, and Utah all began their tax calculations with federal AGI, (7) then directly linked to the federal standard deduction and personal exemptions.
The taxpayer must then compare this amount to the total itemized deductions claimed for 2018 or to the standard deduction that could have been taken for 2018.
Under optional standard deduction (OSD), the taxpayer can avail himself of up to 40 percent of gross sales or receipts as a deduction.
For 2018, we took the standard deduction, and we owe $1,180.
Their total itemized deduction is $14,000, which is above the standard deduction. In 2019, A received a $1,500 state income tax refund due to the overpayment of state income taxes in 2018.
On their joint 2018 tax return, they can claim a $24,000 standard deduction, plus an extra $1,300 each, because the IRS considers them aged (over 65).
It's also worth noting there's a misconception out there that because of the increase in the standard deduction, people think they can no longer itemize.
In fact, while roughly 70% of taxpayers have used the standard deduction historically, experts now expect that 95% of all taxpayers will find the standard deduction more valuable than itemizing.
But a major plot twist may make the issue even more vexing for some this tax season: The standard deduction nearly doubled in 2018 to $12,000 for single filers, $18,000 for heads of household and $24,000 for joint filers.
The increasing of the standard deduction along with the curtailing or elimination of many deductions individuals could previously itemize on their returns has resulted in the concept of clustering becoming palatable to many more individuals.
Thompson, the immediate past president of the National Society of Accountants, used the oil change analogy in considering this year's tax changes, including a nearly doubled standard deduction that could cut business for tax preparers.

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