What is the standard deduction amount for 2021 and 2020? The IRS updated the number and it’s a little bit higher this year.
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 2020 standard tax deduction amount is a bit higher than the 2019 deduction amount for most taxpayers because of limited inflation.
Remember, even though you will be filling your taxes in early 2021, those tax returns are for the year 2020, so use the 2020 standard deduction amount on taxes you work on in first quarter 2021.
2020 Standard Tax Deduction Amount
As usual, there are different deduction values depending upon how you file your income taxes.
- Filing Single: The 2020 standard Deduction is $12,400, up $200 from 2019.
- Married Filing Jointly: Standard deduction for married filing jointly in 2020 is $24,800, which is up $400 from 2019.
- Head of Household: The head of household standard deduction is now $18,650.
The 2020 annual gift exclusion is $15,000 this year.
2021 Standard Deduction Amounts
If you are curious, the 2021 standard deduction amount has been released by the IRS. These numbers will be used when filing your 2021 taxes in early 2022. These are NOT the deduction numbers used while filing 2020 taxes before April 15, 2021.
- Single and Married Filing Separately: $12,550
- Married Filing Jointly: $25,100
- Head of Household: $18,800
The annual gift exclusion remains $15,000 for 2021.
Itemizing isn’t really what it used to be under the new tax law.
Instead, taxpayers will need to file one, or more, of seven additional schedules that go along with Form 1040.
For example, Educator expenses, Health Savings Accounts, moving expenses, IRA deductions and Student Loan deductions are all found on Schedule 1. You’ll need Schedule 3 for Child and Dependent care expenses. Schedule 4 has both Self-Employment tax, and where you’ll need to report taxes if you have a nanny.
All reputable tax software, calculates how to still make your deductions (if they add up to enough) and will fill in the appropriate schedules for you. The continue to improve Credit Karma free tax returns. Other tax preparation software includes TaxCut, TaxAct, and TurboTax. — Now is the time to start watching for tax software specials. They always throw out good deals in the holiday shopping season that disappear come the new year.
If doing taxes by hand, then, find the big deductions first, and see if they provide anywhere near the amount necessary to bother filling out the various forms and schedules..
Other large deductions include medical expenses, but only if they exceed 9 percent of your income, and property taxes.
Deductions Without Itemizing
Some deductions are available without itemizing, such as the child tax credit.
Other common tax deductions will require additional forms beyond the basic 1040: educator expenses, health savings account deduction, moving expenses, IRA deductions, student loan interest, and tuition and fees.
Standard Deduction with Small Business
It is still possible to take the standard deduction if you own a small business. Many small businesses file a Schedule C to report income and expenses related to the business. Various businesses can have large deductions (and income) including the home office deduction.