Good morning, I just realized that this is a retirement related session and not ask any tax question. My question was about my 2023 filing only, so most likely not the right place. But, I might as well ask just incase.
I have a tax question comparing my 2022 vs 2023 tax deductions. While completing my 2023 taxes, it was recommended that I use Standard Deductions, which I did. It appears that I paid a much higher amount to both Federal and State. My overall figures in 2023 (income, property taxes, mortgage interest, 1099 div, and charitable donations, etc) did not change much. So, my question for you is: did I miss something? the tax laws/rules change? Or maybe my small change in the figures caused the higher taxes paid?
‘’I apologize for being so vague but any insight would be helpful. Thank you in advance!
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STANDARD DEDUCTION
Many taxpayers are surprised because their itemized deductions are not having the same effect as they did on past tax returns. The new higher standard deduction and the elimination of certain deductions, as well as the cap on state and local taxes have had a major impact since the new tax laws went into effect beginning with 2018 returns.
Your itemized deductions have to be more than your standard deduction before you will see a change in your tax owed or tax refund. The deductions you enter do not necessarily count “dollar for dollar;” many of them are subject to meeting tough thresholds—medical expenses, for example, must meet a threshold that is pretty hard to reach. (Only the amount that is MORE than 7.5% of your AGI counts) The software program uses all the IRS rules that apply to the expenses you enter, and it tells you if you have enough to use your itemized deductions or if using the standard deduction is more advantageous for you. Under the new tax laws, some deductions have been capped—there is a $10,000 limit to the itemized deductions for state, local, property and sales taxes.
Your standard deduction lowers your taxable income. The standard deduction makes some of your income “tax free.” It is not a refund. You will see your standard or itemized deduction amount on line 12 of your 2023 Form 1040.
2023 STANDARD DEDUCTION AMOUNTS
SINGLE $13,850 (65 or older/legally blind + $1850)
MARRIED FILING SEPARATELY $13,850 (65 or older/legally blind + $1500)
MARRIED FILING JOINTLY $27,700 (65+/legally blind) ) + $1500 per spouse
HEAD OF HOUSEHOLD $20,800 (65 or older/blind) + $1850)
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