Spring is just around the corner, and it is the best period to start planning your business for a prosperous 2021. That’s because Prestige Auditors cares about its customers, and we are excited to bring you some good news: there are several standard deductions which are increased for 2021.
But first, let’s try to understand what a standard deduction is.
The main aim of standard deduction is to reduce the amount of your tax debts, by reducing your taxable income. Thus, if you are used to making donations, then your day is finally here! That’s because this option allows you to create a report of main charitable donations made by you during a year, and reduce your tax debts based on the amount of your donations.
The main goal of tax deduction is to reduce your taxes, since less you pay in taxes and save more money as a result. Therefore, we strictly recommend that you pay due attention to 2021’s standard deductions.
Which One to Choose?
Generally, the IRS provides taxpayers with two main types of tax deductions for your tax returns:
- Standard Deductions
- Itemized Deductions
Unfortunately, you are not able to get the advantages of both deductions during the same year; therefore, you have to choose the best one which suits you more.
Generally, the standard deduction is more useful among taxpayers. Therefore, let’s try to understand what is it, and how to apply for standard deduction.
A standard deduction is an amount which is set by the IRS, based on a taxpayer’s filing status. It provides people with an opportunity to avoid nerve-wracking processes, such as record-keeping and additional paperwork requirements. So, if you do not have lots of qualified expenses such as medical expenses and charitable contributions, then this option is what you really need.
The Sweetness of 2021 Standard Deductions…
The standard tax deduction provides many taxpayers with lots of benefits, since you will have more tax savings with this type of deduction.
We have collected the 2021 main standard deduction amounts for individuals under 65:
- $12,550 for single or married filing separately
- $25,100 for married filing jointly or applying for widowers
- 18,800 for a head of household
The rules go the same as in 2020 for those who are claimed as a dependent on someone’s return. A standard deduction for dependents is $1,100. There are lots of other deduction amounts for those who are over 65 or single, which is up to $1,350.
However, if you are single, and have an adjusted gross income of $25,000, plus, if we consider the fact that a standard deduction in 2021 is $12,550, then you are provided with an opportunity to avoid paying that amount. Instead, you have to pay only $12,450. Moreover, if you filing jointly, you can deduct more than $25,100 in 2021.
Keep in mind that you are allowed to use the advantages of standard deduction only in case you do not itemize your taxes. Otherwise, you risk finding yourself in an unlucky list of ineligible taxpayers. As a rule, this list consists of a nonresident aliens or married individuals whose spouse itemizes deductions, or an individual who has filed his or her return during the period of less than 12 months.
We Are Here to Help
A standard deduction provides most tax payers with a unique opportunity to reduce tax debts. If you want to deduct your taxes and do not know how to launch this process, reach out to Prestige Auditors’ professional tax advisors, and we will choose the best tax deductions that you are eligible for. By working with us, you can be 100% sure that you do not overpay in your taxes. Additionally, our team will help you file all the necessary paperwork, and will take care of the entire process of your tax returns.