Deciding between the standard deduction and itemized deduction depends greatly on your filing status and financial situation.
In general, simple returns often benefit the most from the standard deduction, while more complicated tax returns may benefit from individual deductions and credits you can claim by itemizing your deductions tax breaks.
If your itemized deductions are greater than the standard deduction amount for your filing situation, then you should opt for the itemized deduction.
Claiming the standard deduction in 2022
The standard deduction refers to a set amount of money you can reduce your taxable income by when filing your tax return. For 2022, the standard deduction amounts by filing status are:
- Single or Married, Filing Separately - $12,950
- Married Filing Jointly or Qualifying Widow - $25,900
- Head of Household - $19,400
So, if you file as Single and made $53,000 in taxable income last year, the standard deduction would bump down your taxable income to $40,050. This would actually bump you down to a lower tax bracket for 2022, charging you 12% income tax instead of 22%.
Most taxpayers will benefit from the standard deduction, but there are some cases where itemized deductions will save you money.
Claiming itemized deductions in 2022
If your eligible deductions total more than the standard deduction you’re eligible for, it may make sense to itemize them. For instance, let’s say you’re a single filer and you could claim $15,000 combined in medical, real estate taxes, and home office deductions, sales taxes, mortgage interest, and charitable donations for 2022.
In this case, you can save more money by itemizing your deductions ($15,000 versus the standard deduction amount of $12,950).