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Federal Standard Deduction 2018

Last Update Date : April 30, 2019
Estimated Read Time: 6 min

irs standard deduction 2018

The Standard Deduction is that share of income which is exempted from tax. According to the new reforms in U.S taxes, the Standard Deduction will be higher. As expected, after the higher Standard Deductions, 92% of Americans will opt for Standard Deductions in tax reforms. These deductions will bring down your sum of earnings which you have to pay before April 15 timeline.

How much is the Standard deduction as per U.S. Tax Reform?

The new limits of Standard Deduction for different tax filing status are as follows:

  • Single taxpayer: Single is a tax filing status which is used by a person who is not married and does not fall under any other tax filing category. With the change in the U.S. tax reform, the Standard deduction for a single taxpayer is increased from $6,350 in the year 2017 to $12,000.

 

  • Head of household: In order to file as the head of household, you must meet the following requirement:
    1. You must have paid for more than half of the household expenses.
    2. You must be unmarried for the tax year.
    3. In case a qualified person lived with you in the home for more than half the year.

In accordance with the new tax reforms in the U.S., if you meet the above requirements your standard deduction will be $18,000 which has increased in comparison of 2017 being $9,350.

  • Married filing jointly: Married filing jointly refers to a filing status meant for the married couples who are wedded before the end of the tax year. If you want to file as Married filing jointly you must qualify the below conditions:
    • The couple must complete one shared tax return.
    • The couple must jointly take the responsibility for the income reported and taxes owed.

With a change in the U.S. tax reform, the couple will get a higher standard deduction of $24,000 in comparison to $12,700 which was in 2017.

 

  • Married filing separately: It is advantageous for a married to file separately in the following situations:
    • In case you want to separate your tax liability from your spouse.
    • In case you and/or your spouse both have the income that are taxable and you’re adjusted gross income is limited by at least one of your significant itemized deduction.

With a change in the U.S. tax reforms, married filing separately has increased to $12,000 from $6,350 which was in the year 2017.

 

  • Qualifying widow(er): The conditions of using qualifying widow(er) are as follows:
    • If your spouse died, you can use married filing jointly as your filing status in that year and the next two subsequent years you can use qualifying widower filing status.
    • The benefits are similar to the married filing jointly returns.

The qualifying widow(er) will get a standard deduction of $24,000 for the years 2018-2025 which has increased from 2017 deduction of $12,700.

Infographic Explaining Standard Deduction Limit in 2017 vs 2018

 

IRS Standard Deduction 2018

Standard Deduction Eligibility

You are eligible for Standard Deduction if you meet one of below criteria:

  • If you are a US citizen.
  • If you were a resident alien in the U.S. for the entire fiscal year.
  • If you are married, your spouse must be a citizen of US or a resident alien for the entire fiscal year.

You aren’t eligible for Standard Deduction if you fall under any of these categories:

  • If you file a tax return below a period of 12 months due to a change in your annual accounting period.
  • If you have been a non- resident alien by any chance in the financial year exceptions to F1/J1 Visa holders.
  • If you’re married, and filing as Married filing separate returns and your spouse is itemising his or her deductions.

Any Estates, Partnerships, Common trust funds and trusts are also not eligible for Standard Deduction.

 How to get the Standard Deductions

Standard Deduction is determined by the following:

  • Your filing status whether you are:
    1. single taxpayer
    2. Head of Household
    3. Married filing Jointly (MSJ)
    4. Married filing Separately (MFS)
  • Your age: If you are 65 years of age or above, you will get additional deductions.
  • In case, you are blind:
    The conditions to qualify for higher deductions is any of these criterias:

    1. You don’t have corrected vision of at least 20/200 or
    2. You have extreme limitations in the field of vision.

Why opt for Standard Deduction over Itemized Deduction?

  • With such huge increases to the standard deduction amount, it’ll take a lot more itemized deductions in order to make it worth it to go to the extra trouble of itemizing.
  • In addition, the new tax laws also put some limitations on itemized deductions that didn’t exist previously. The most important new limit is on state and local taxes, for which you’ll no longer be able to claim more than $10,000 as an itemized deduction
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Documents Required

You don’t require any documents for claiming Standard Deductions.

Cases in which Standard Deduction increases

In case a person is blind

  • Single or head of household – an additional $1600.
  • Marriage filing jointly, or your spouse is blind – an additional $1300.
  • If you as well as your spouse is blind- an additional $2600.

In case a person is 65 years or above

  • Single or head of household – an additional $1600.
  • Marriage filing jointly, or your spouse is blind – an additional $1300.
  • If you as well as your spouse is blind- an additional $2600.

Advantages

  • Higher Standard deductions mean more savings of taxpayers.
  • If you are having a disability, you have the pros of additional deductions.
  • If you are of 65 years of age or above, you have the pros of additional deductions.
  • Standard deductions are convenient as you don’t require to keep a record of your expenses for deductions as in itemised deduction.
  • The Personal exemption is clubbed in standard deductions, which means more exemptions for taxpayers.

Limitations

  • Your standard deduction will be restricted to $1050 if you were relying on another person during the financial year.
  • You are not liable for the standard deduction if you are filing separate returns even if you are married, and your spouse has itemised deductions.
  • If you are non-resident alien and filing a non – resident return or dual status returns you are not liable for standard deductions.

With the new tax reforms of US 2018-2025, the Standard deduction’s exemption has increased which is in favor of every taxpayer. This helps reduce the tax burden of an individual.

People Also Ask

Q. Can a person claim for standard deduction who is U.S citizen & working outside of U.S.?

A. Yes, the individual who is U.S. citizen can avail of standard deduction benefits, irrespective of his geographical boundaries anytime during the year.

Q. Can students from India on J1/F1 visa claim for standard deduction?

A. Yes, the students/trainees who are travelling to the U.S. on J1/F1 visas are eligible to claim the standard deduction on their returns, even though they will be filing a non – resident return in the U.S.

Q. What should be done if a person doesn’t qualify for the Standard Deduction?

A. You should meet the eligibility criteria of being a resident of U.S and meet the SPT requirements in order to qualify for standard deductions. If not, you cannot get any exemptions under the standard deductions.

How H&R Block can help you?

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Mohammadfaruq Memon
Mohd. Faruq Memon is the Head of U.S. Expat Tax Services at H&R Block (India) with an industry experience of fifteen years. He holds a masters-level qualification and his expertise lies in Dual Taxation. On weekends, Faruq is a movie buff who also enjoys watching cricket!

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