As most individuals and tax professionals know by now, the standard deduction almost doubled under the Tax Cuts and Jobs Act (TCJA) for the single, married filing jointly (MFJ), married filing separately (MFS), head of household (HOH) and surviving spouse filing statuses. For the 2020 tax year under the TCJA, the standard deduction dollar amounts increased to:
- $24,800 for MFJ and surviving spouses
- $18,650 for HOH
- $12,400 for singles and MFS
- $1,300 for MFJ, over 65 or blind
- $1,650 for singles and HOH, over 65 or blind
The TCJA temporarily increases the basic standard deduction for individuals across all filing statuses. This provision began in 2018 and continues through 2025, when it sunsets. For taxpayers who do not itemize, this increase to the standard deduction results in a decrease of taxable income in most situations. Let’s look at two examples to see how the new tax act lowers the taxpayer’s tax liability.
In 2020, Carly, a single taxpayer, qualifies for an additional deduction because she is 70 years old. Her standard deduction for 2020 is $14,050 ($12,400, the standard deduction for 2020, plus $1,650, the 2020 additional standard deduction for the singles who are over 65 or blind).
In 2020, Nicole and her spouse are joint filers. Both qualify for an additional standard deduction because they are both over 65. Their Form 1040 standard deduction is $27,400 ($24,800, the 2020 standard deduction for joint filers, plus 2 x $1,300, the 2020 additional standard deduction for married persons who are over 65 or blind).
The above examples reflect the benefit of the new standard deduction. Millions of taxpayers won’t be itemizing this year to reduce their Federal income-tax bill. They’ll claim the standard deduction instead.
Barry Lisak is an IRS Enrolled Agent, meaning that he has passed special U.S. Treasury Department exams that qualify him to represent clients dealing with audits or tax-resolution cases. Any questions can be directed to him at (516) TAX-SAVE, or email@example.com.
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