Tab F Standard Deduction

The overwhelming majority of tax returns we do at our site are Basic tax returns, which means that most of our taxpayers do NOT itemize deductions!

The main exception to that rule are homeowners, who may have enough in mortgage interest and property tax payments to make it worthwhile itemizing.

In any case, all taxpayers on the Basic certification exam take the Standard Deduction, so that is what you need to learn about first.  (We'll get to itemized deductions after you pass the Basic Exam.)

It is important to note that the Standard Deduction is not actually all that standard!  The amount depends on filing status (Single/MFS, MFJ/QW, HoH).  In addition, taxpayers who are blind and/or elderly are entitled to higher standard deductions. 

The amount of the Standard Deduction goes in line 40 of Form 1040, and is a subtraction item that ultimately reduces Taxable Income on line 43.

Thus, the Standard Deduction is a type of "below-the-line" deduction because it does not reduce AGI, but does reduce Taxable Income.