The standard deduction for 2017 is $6,350 for single taxpayers and $12,700 for married taxpayers filing joint returns. However, there's a chance it could change before next tax season, and no matter where it ends up, you may be better off not claiming it. Here's what you need to know about the standard deduction, and how it might change in the near future.
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What is the standard deduction?
In a nutshell, you have two main choices when it comes to tax deductions. You can choose to itemize your deductions, which means to add up the dollar value of each tax deduction you're entitled to. Alternatively, you could go the simpler route and claim the standard deduction, which is the amount of income every taxpayer is entitled to exclude from their taxable income.
It's also worth mentioning that some tax deductions can be taken regardless of whether you itemize or choose to take the standard deduction. Known as "adjustments to income," or "above-the-line" deductions, these include such potentially lucrative tax breaks as:
- Traditional IRA contributions
- Student loan interest
- Tuition and fees
- Moving expenses
- Educator expenses
- Alimony paid
You can read more about each of these deductionshere, but the point is that you can take the standard deduction and still use these. On the other hand, most other well-known tax deductions, such as mortgage interest, charitable contributions, and medical expenses, require you to itemize deductions. In other words, you can't take the standard deduction and deduct your mortgage interest.
The standard deduction for 2017
Under the current IRS law, the standard deduction has increased for the 2017 tax year (for which you'll file a tax return in 2018). There are three different standard deduction amounts, which vary depending on tax filing status. Because many people have yet to file their tax return for the 2016 tax year, here are the standard deduction amounts for both 2016 and 2017.
The 2017 standard deduction might change
While the figures in the chart are the most current standard deduction amounts as of February 2017, there's a strong chance that these will change before you file your 2017 tax return.
Tax reform was a cornerstone of President Donald Trump's campaign, and one of his proposals involved significantly increasing the standard deduction to $15,000 for single filers and $30,000 for married couples filing jointly. The head of household status would be eliminated.
The trade-off is that the personal exemption, which is currently $4,050 per person, would be eliminated under Trump's tax plan. So, depending on how many people are in your household, the increased standard deduction may or may not result in a tax cut.
Finally, remember that President Trump's campaign tax planis likely to be somewhat different from the finalized tax reform bill that Congress ultimately passes. Trump and Republican leaders in Congress mostly agree what direction the tax code should head in, but they aren't exactly on the same page, so it remains to be seen what will happen with things like the standard deduction. However, there is a very real possibility that the 2017 standard deductions listed in the chart won't end up being the actual 2017 standard deduction you might take when you file your tax return.
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