What is Standard Deduction under US Code 26?

1 Comment
  1. Prashant Thakur says

    The standard deduction is an amount that every taxpayer can reduce from the amount of income on which he is taxed. The standard deduction is divided in two parts

    1. Basic standard deduction and
    2. Additional standard deductions if you’re 65 or older and/or blind, and whether another taxpayer can claim you as a dependent.

    2018 Standard Deduction

    Filing Status      2018 2017
    Single $6,500 $6,350
    Head of Household $9,550 $9,350
    Married Filing Jointly $13,000 $12,700
    Qualifying Widow/Widower (Surviving Spouse) $13,000 $12,700
    Married Filing Separately $6,500 $6,350
    Additional Standard deduction
    2018 2017
    (i) Person -65 yrs & more $1,300 $1,250
    (ii) Blind persons $1,300 $1,250
    if (i) & (ii) are unmarried or not a surviving spouse, the additional standard deduction goes to $ 1600 in Tax year 2018  up from $1550 for year 2017

    Who & When Standard Deduction not available?

    The standard deduction isn’t available  if you itemize your deductions . Certain taxpayers aren’t entitled to the standard deduction:

    1. An individual filing as married filing separately whose spouse itemizes deductions
    2. A nonresident alien or dual status alien during any part of the year
    3. If you file a return for a period of less than 12 months due to a change in  annual accounting period
    4. If you are a estate or a trust, common trust fund, or partnership.

    Reference : 26 U.S. Code § 63 – Clause (c) underTaxable income defined

    (c) Standard deduction For purposes of this subtitle—
    (1) In general Except as otherwise provided in this subsection, the term “standard deduction” means the sum of—
    (A) the basic standard deduction, and
    (B) the additional standard deduction.
    (2) Basic standard deduction For purposes of paragraph (1), the basic standard deduction is—
    (A) 200 percent of the dollar amount in effect under subparagraph (C) for the taxable year in the case of—
    (i) a joint return, or
    (ii) a surviving spouse (as defined in section 2(a)),
    (B) $4,400 in the case of a head of household (as defined in section 2(b)), or
    (C) $3,000 in any other case.
    (3) Additional standard deduction for aged and blind

    For purposes of paragraph (1), the additional standard deduction is the sum of each additional amount to which the taxpayer is entitled under subsection (f).
    (4) Adjustments for inflationIn the case of any taxable year beginning in a calendar year after 1988, each dollar amount contained in paragraph (2)(B), (2)(C), or (5) or subsection (f) shall be increased by an amount equal to—
    (A) such dollar amount, multiplied by
    (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting for “calendar year 1992” in subparagraph (B) thereof—
    (i) “calendar year 1987” in the case of the dollar amounts contained in paragraph (2)(B), (2)(C), or (5)(A) or subsection (f), and
    (ii) “calendar year 1997” in the case of the dollar amount contained in paragraph (5)(B).
    (5) Limitation on basic standard deduction in the case of certain dependentsIn the case of an individual with respect to whom a deduction under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which the individual’s taxable year begins, the basic standard deduction applicable to such individual for such individual’s taxable year shall not exceed the greater of—
    (A) $500, or
    (B) the sum of $250 and such individual’s earned income.
    (6) Certain individuals, etc., not eligible for standard deductionIn the case of—
    (A) a married individual filing a separate return where either spouse itemizes deductions,
    (B) a nonresident alien individual,
    (C) an individual making a return under section 443(a)(1) for a period of less than 12 months on account of a change in his annual accounting period, or
    (D) an estate or trust, common trust fund, or partnership,
    the standard deduction shall be zero

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