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You can claim the standard deduction or you can itemize your deductions, but you can't do both. Subtract your standard deduction from your adjusted gross income, or AGI, which reduces your taxable income. Choose the method that results in the lowest tax.
Most taxpayers claim the standard deduction amount. The amounts are adjusted each tax year for inflation.
2016 standard deduction for taxpayers younger than 65
|Head of household||$9,300|
|Married filing jointly||$12,600|
|Qualifying widow or widower||$12,600|
|Married filing separately||$6,300|
Standard deductions for older, visually impaired taxpayers
Taxpayers who are 65 or older, or who are blind, receive larger standard deduction amounts. Each is noted via a checkbox on Form 1040 and Form 1040A.
The age and vision of each spouse is counted separately, meaning that an older couple could check up to four boxes, each worth $1,250 as an additional standard deduction (except for single taxpayers, who get a $1,550 break). The final box count is used to figure the adjusted standard deduction amount.
2016 standard deduction for taxpayers older than 65 and/or visually impaired
|Filing status||Number of boxes checked||Standard deduction amount|
|Married filing jointly||1
|Married filing separately||1
|Head of household||1
|Qualifying widow(er) with dependent child||1
For standard deduction amount purposes, if your 65th birthday was Jan. 1, the IRS considers you age 65 for the previous tax year and you may claim the larger standard deduction.
As for vision considerations, you may qualify for the larger deduction even if you are partially blind by attaching a letter from your physician attesting to your limited vision.
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Standard deductions for dependent taxpayers
Sometimes you might file a return, for example, to get a refund of withheld money, even though you can be claimed as a dependent on someone else's return.
In this case, a dependent taxpayer who is younger than 65 and not blind can take as a standard deduction the greater of $1,050 or his or her earned income plus $350. This deduction amount, however, cannot exceed the basic standard deductions for the dependent taxpayer's filing status.
Although most taxpayers claim the standard deduction, all taxpayers may choose to itemize deductions and claim that amount if it is larger than their allowable standard deduction amount.
You must file Form 1040 and Schedule A to itemize.
Some itemized deductions are limited based on a taxpayer's adjusted gross income, or AGI. Others are restricted to a threshold, or percentage, of the filer's AGI.
Taxpayers who make a certain amount also may not be able to deduct all of their itemized deductions. The total of Schedule A deductions begins phasing out if your AGI is more than $259,400 if single; $311,300 if married filing jointly.
Limits on itemized deductions
- Medical expenses
Amount exceeding 10 percent of your AGI is deductible. The threshold for taxpayers older than 65 is 7.5 percent for the 2016 tax year and goes up to 10 percent for 2017.
- Mortgage loan interest
Generally, fully deductible for loans totaling $1 million or less ($500,000 if married filing separately) on your primary residence or second home.
- Home equity loan interest
Generally, deductible for loans up to $100,000 ($50,000 if married filing separately) that are secured by your home.
- Charitable contribution
Most are fully deductible as long as the gift amount does not exceed 50 percent of AGI.
- Casualty losses
Deductible after subtracting insurance reimbursements, 10 percent of your AGI and $100.
- Miscellaneous expenses
Amount exceeding 2 percent of AGI is deductible.
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