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Whats a standard detuction and how does it help me?

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Whats a standard detuction and how does it help me?

The standard deduction is a set amount that the IRS allows every taxpayer to offset against their income.  For 2016, the standard deduction amounts are:  $6,350 (single), $12700 (married filing jointly), or $9,350 (head of household).  Basically, the IRS lets you take this amount and subtract it from your income and (after any other deductions or credits you might have) you pay tax on the remaining amount of income.

Example:  You made $25,000 from a W2 job during the year.  Instead of paying taxes on the full $25,000, the IRS allows you to take a standard deduction of $6,350 (if single).  So you would pay taxes on $18,650.


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