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It’s the second most wonderful time of the year: Tax season. You can just smell the paperwork. Hopefully we can help make your life a little easier by saving you from having to scroll through the IRS website to look for the updated standard deduction for 2020 and 2021 tax years.
Did you know that the IRS allows individuals who are age 65 or older or blind to take an additional standard deduction? If this applies to you or your spouse, be sure to check the appropriate boxes on your Form 1040.
You can claim deductions on your federal tax return one of two ways. You can use the standard deduction or you can itemize your deductions.
The standard deduction is the dollar amount you’re allowed to take on your tax return to reduce your overall taxable income. The amount of the deduction is usually adjusted each year for inflation.
But not everyone may take the standard deduction. For example, taxpayers who choose to itemize their deduction (this is when you list and add up your eligible deductions one by one) cannot claim the standard deduction. The IRS also provides the following list of taxpayers who are not eligible:
Typically, individuals choose the deduction method that provides the largest reduction to their taxable income. But taxes are complicated, and each person’s tax situation is different. The smart thing to do is to consult a tax professional to determine the best way to file your returns.
This article is for informational purposes only and is not a substitute for individualized professional advice. Individuals should consult their own tax advisor for matters specific to their own taxes and nothing communicated to you herein should be considered tax advice. This article was prepared by and approved by Marcus by Goldman Sachs, but does not reflect the institutional opinions of Goldman Sachs Bank USA, Goldman Sachs Group, Inc. or any of their affiliates, subsidiaries or division. Goldman Sachs Bank USA does not provide any financial, economic, legal, accounting, tax or other recommendation in this article. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice. Information contained in this article does not constitute the provision of investment advice by Goldman Sachs Bank USA or any its affiliates. Neither Goldman Sachs Bank USA nor any of its affiliates makes any representations or warranties, express or implied, as to the accuracy or completeness of the statements or any information contained in this document and any liability therefore is expressly disclaimed.