The standard deduction undoubtedly carries the most significant importance as far as reducing the taxable income goes for the majority of taxpayers.
While every taxpayer has the option to itemize their deductions for the qualifying expenses they have, not everybody can write-off as much as the standard deduction for their filing status. Due to this, an overwhelming majority of taxpayers take the standard deduction rather than itemizing.
Itemizing or standard deduction in 2022
If you’re in a limbo where you can’t decide whether to take the standard deduction or itemize, here is what you should do.
Calculate your itemized deductions first, and if the total amount exceeds the standard deduction for the tax season, itemize. If not, opt-out for the standard deduction. This is the easiest way to figure out which one is going to be more beneficial towards your tax liability.
Standard deduction for married filers
Those who are married and filing a joint return are eligible for twice as much the standard deduction single filers get. The standard deduction is the same as what single filers get if filing a separate tax return.
For the 2021 taxes you’ll file in 2022; the Internal Revenue Service hasn’t announced the standard deduction as of now. But, we have some speculations on how much it can be, and it shouldn’t be too far off from the actual standard deduction, considering everything.
2022 standard deduction estimate
Since the Tax Cuts and Jobs Act of 2017, the standard deduction has been increased by $200 every year, with the last tax season being the only exception where the increase was $150. That’s, of course, the increase for single filers. Taxpayers who are married filing a joint return get double that amount.
This year is likely to be different as far as the increase in the standard deduction goes, as the COVID-19 had its fair share of impact on the finances of pretty much every American.
Most financial advisors alongside us expect an increase of at least $250 single filers, thus, $500 joint filers, and between $350 and $400 for heads of households.
When is the IRS announcing the new standard deduction?
The standard deduction and the tax brackets for 2022 are announced when the IRS publishes the agency’s inflation and changes to the cost of living statistics. This announcement is usually made before the new tax year begins. It’s best to expect it to be released by the Internal Revenue Service around late November and mid-December.
As soon as the standard deduction 2022 is finalized, we’ll keep you updated. In the meantime, you can expect the amounts of increase as mentioned above.
How to claim the standard deduction on taxes?
There is no difference between how the standard deduction is claimed versus how it will be claimed now. You’ll enter the standard deduction amount that applies to you on Form 1040 when the IRS issues it for use in 2022. Once the IRS releases the new federal income tax returns, we’ll share the instructions to file along with everything else you need to know about submitting it.
Waiting to file a tax return
If you’re hoping for a high tax refund, it’s not something pleasant to wait to file your federal income tax return. However, if you’re in no rush, we suggest waiting before preparing and sending your tax return off to the IRS. As there have been some changes to the tax code, we expect these changes to be expanded across different areas.
Once changes take effect, you might need to amend your tax return to get the benefits. It happened once with the unemployment compensation exclusion and might happen again. Give yourself a little time and don’t rush filing a return.