What is the standard deduction amount for 2016? The IRS updated the number and it’s a little bit higher this year if you file as head of household.
When filing income taxes, taxpayers can choose to either itemize tax deductions, or take the standard tax deduction amount. The IRS adjusts how much the standard deduction is each year based upon inflation. The 2016 standard tax deduction amount is the same as the 2015 deduction amount for most taxpayers because of limited inflation.
2016 Standard Tax Deduction Amount
As usual, there are different deduction values depending upon how you file your income taxes.
- Filing Single: The 2016 standard Deduction is $6,300, unchanged from 2015, and up slightly from $6,200 in 2014.
- Married Filing Jointly: Standard deduction for married filing jointly in 2016 is $12,600, the same as 2016, and up from $12,400 in 2014.
- Head of Household: The head of household standard deduction is now $9,300, which is a $50 bump over the $9,250 standard deduction amount in in 2015.
If taxpayers use the standard deduction when filing taxes, the personal exemption is included in the standard tax deduction amount. However, when itemizing tax deductions the personal exemption amount is important.
For 2016, the personal exemption amount is $4,050, which is up a bit from last year’s $4,000. However, taxpayers with incomes above $259,400 (filing single), or $311,300 (married filing jointly) are subject to phase-out of the personal exemption.
Itemize or Use Standard Tax Deduction
To decide whether to itemize deductions, or take the standard deduction, taxpayers should add up their potential itemized tax deductions, and add the personal exemption amount. If that total amount is greater than the applicable standard tax deduction, then itemizing will result in lower taxes.
For most taxpayers whose income comes mainly from salary or other employment, rather than investment income, trust income, or other income, the main determinate of whether itemizing or taking the standard deduction is best is how much mortgage interest is deductible. Typically, without deductible mortgage interest of at least $3,000 or more, the average taxpayer will not have enough deductions to making itemizing better than taking the standard deduction.
All reputable tax software, calculates whether it is better for a tax payer to itemize or not. If doing taxes by hand, then, find the big deductions first, and see if they provide anywhere near the standard deduction number. Itemized deductions are reported to the IRS on Schedule A of the Form 1040.
Other large deductions include medical expenses, but only if they exceed 9 percent of your income, and property taxes.
Deductions Without Itemizing
Many tax deductions are available without itemizing. To see a complete list, check lines 23 through 35 on IRS Form 1040. On lines 49 through 53 are various tax credits that are available whether the standard deduction or itemized deductions are used.
Common tax deductions without itemizing include: educator expenses, health savings account deduction, moving expenses, IRA deductions, student loan interest, and tuition and fees.
Common tax credits offered with, or without itemizing, include the child tax credit and education credits.
Standard Deduction with Small Business
It is still possible to take the standard deduction if you own a small business. Many small businesses files a Schedule C to report income and expenses related to the business. A Schedule C can be filed with, or without a Schedule A for itemized deductions. The results of the Schedule C are reported on Line 12 of the 1040 Form, not within Schedule A. Various businesses can have large deductions (and income) including the home office deduction.
Other Tax Information