Standard Deduction for 2022-2023: Everything You Need to Know

Tax deductions are crucial for filing your tax return if you don’t want to pay more than your fair share. Tax deductions work by deducting eligible expenses from your overall taxable income. Less taxable income means owing less in taxes, and it can even mean slipping down a tax bracket. Knowing how much your tax deductions can help you make crucial tax deductions. 

The expenses you can claim for deductions are not meant to be counted toward your taxable income. These are essential costs, and the IRS is intentional about not taxing the money that goes to paying them. Enter: tax deductions. 

However, the system for claiming deductions is complicated, and it requires keeping records of expenses. Not everyone has a comprehensive paper trail of all their deductible expenses ready to put together for their 1040. That’s a lot of work for both the individual and the IRS.

One way the government makes this process smoother is with the standard deduction. This is the primary deduction option individual taxpayers should be aware of. Whether or not you claim it, it’s essential to understand how it works. Here’s what you need to know:

What is the Standard Deduction?

The IRS offers the standard deduction as a sizable tax deduction available to most individual taxpayers in the United States. It allows you to deduct a portion of your income from your total taxable income without claiming or proving your eligibility for specific tax deductions. 

It effectively functions as a shortcut, allowing you to assume a certain amount of tax-deductible expenses and contributions, whether or not you have any records to suggest as much.   

To be eligible for the standard deduction, you must be a U.S. citizen or legal resident. You can’t have a spouse filing separately with itemized deductions, and your tax return must be for a whole 12-month period.

How Much is the Standard Deduction for 2022 and 2023?

The IRS (Internal Revenue Service) generally makes tax inflation adjustments each year to the standard deduction, increasing it over time to keep pace with economic change. For the 2023 tax year, the standard deduction is $13,850 for a single individual and $27,700 for a married couple filing jointly.  

For the 2022 tax year, which will apply as you file your tax return in April 2023, the single standard deduction is $12,950, while the deduction for a married couple filing together is $25,900. 

Recent laws have increased the standard deduction significantly from what it was in the past, and it will continue to grow regularly.

Increase for Senior Citizens

Taxpayers 65 years or older get an increase in the standard deduction, further shielding them from a heavy tax burden. Single individuals get $1,850 more. A married couple filing jointly gets $1,500 more deducted for each spouse 65 or older. 

Standard vs. Itemized Deductions

Itemized deductions involve presenting the IRS with a complete list of the tax deductions you are claiming and the amount of money they deduct from your taxes. You must present each deduction with valid documentation. This requires careful record management of your deductible expenses and the relevant receipts.

Here are a few of the deductions you can claim if you are itemizing your deductions:

Mortgage interest

Student loan interest

Property taxes and certain other taxes

Charitable contributions

Medical costs

If you claim the standard deduction, you take the shortcut and waive your right to claim specific deductions for individual taxpayers. It is a substitute option that functions in place of itemized deductions.

These deductions function separately from those you can claim as a small business owner if you earn income from self-employment.

Charitable Contributions in the 2022 Tax Year

While the rules explained above regulate how the standard deduction works in a typical year, the last couple of years has brought about unexpected changes. For the 2022 tax year, the IRS has adjusted the rules slightly to encourage charitable donations. 

When you file your tax return for the 2022 tax year, you can claim deductions for donations you made to qualifying charities. This is done by itemizing deductions on your Schedule A in order to take a charitable tax deduction. It is also important to note that for 2022, the usual 60% AGI ceiling on charitable cash contribution is restored. 

When is it Better to Claim the Standard Deduction?

The right option for you will depend on your particular tax situation. The only way to know for sure which is best is to add up every deduction available for you and find out whether the total is higher than the dollar amount already available with the standard deduction. 

If you aren’t eligible for many deductions or don’t have the records or receipts to quantify and prove your itemized deductions, then it is likely a better choice for you to claim the standard deduction. If your situation isn’t clear, you can work with an accountant to figure out the best way forward. 

Work with an Accountant to Maximize your Deductions

Find an accountant you can trust to help calculate payroll tax and work with you to increase your savings. This can come in the form of federal tax, property tax, social security tax, payroll tax, and more.  Overall, this will help you prepare your tax documents checklist and get the notable tax forms.  An expert can help you take advantage of every opportunity now and even prepare you for the future. They can help you set up a better record-keeping process for tracking deductible expenses in the future. 

With enough planning, you can also schedule your deductible expenses to maximize deductions across multiple years. This way, you can alternate in different years between the standard deduction and itemized deductions, maximizing your overall tax savings over time.  

Connect with tax professionals at 1-800Accountant and make sure you maximize your deductions and get the optimal outcome on your tax return. Get the help you need and the savings you deserve when you file your income tax return.