Standard vs. Itemized Deductions

What is the difference between standard deductions, itemized deductions, and above-the-line deductions?

All deductions work by cutting your taxable income; lower taxable income generally means a reduced tax bill. Deductions are intentional loopholes written into the tax code to give you a break for certain financial and life circumstances.

The three types of deductions we’ve mentioned differ in where they appear on the tax return and who qualifies to claim them.

What is an above-the-line deduction?

The first and most basic of these are the so-called above-the-line deductions. They’re really stand-alone adjustments, and you may qualify for them whether you itemize or take the standard deduction (we’ll get to those in a bit). These deductions include:

• Educator expenses – Lets teachers recoup some of the classroom expenses they often pay out of their own pockets.
• Moving expenses – If you’re in the military and you move for a new assignment, you can qualify for this.
• Student loan interest – If you’re paying off student loans, the interest portion of the payment can count toward a deduction.
• IRA contributions – If you have a qualified IRA, portions of the amount you contribute can be deducted from your income.

Important: The rules for deducting charitable contributions have changed for tax year 2022. Last year, an above-the-line deduction was available to taxpayers who chose the standard deduction. Now, a deduction for charitable donations—whether for cash donations or donating goods—is only available to those who itemize.

What are standard deductions?

Up next, we come to a fork in the road: you either have to claim the standard deduction or itemize deductions. Naturally, you’d want to pick whichever saves you the most money, and that’s exactly what we do when you file on 1040.com.

The first option, the standard deduction, is just what it sounds like: a fixed, base-level amount you can get if you don’t qualify for a higher amount through itemized deductions. If your tax picture is pretty simple, and you don’t have a lot of special circumstances that you can write off as an itemized deduction, you’ll probably get the standard deduction. The standard deduction is a set amount based on your filing status: married filing jointly, single, head of household, and so on.

The standard deduction amounts for the 2022 tax year are:

• $12,950 for single or married filing separate filers
• $19,400 for head of household filers
• $25,900 for married filing jointly filers
• Those amounts go up if you’re 65 or over, or blind.

What are itemized deductions?

Itemized deductions are tax breaks you can only take if you itemize. In effect, by itemizing, you’re foregoing the standard deduction (you can’t get both) and opting to take the specific deductions you list on your tax return. Some of the more common itemized deductions include:

Mortgage expense – This can include mortgage interest and mortgage insurance premiums.

Other taxes – You may be able to deduct the amount you paid for state and local taxes, including personal property real estate taxes.

Gifts to charity – If you can itemize, you can deduct the fair market value of the spare TV you donated to the animal shelter’s thrift store, as well as donations to a church. Cash donations to qualifying organizations are also deductible. Be sure to confirm your chosen charity's eligibility using the Tax Exempt Organization Search Tool on IRS.gov! 

Medical and dental expenses – A deduction is available for unreimbursed expenses above a certain percentage of your income.

Feel good about deductions with 1040.com

When you file your taxes with 1040.com, we’ll look at your information and automatically select which option saves you the most on your taxes owed.

It’s just another way we make feel-good taxes a reality, especially for just one flat $25 rate. Be sure to sign up or log in today!