Tracy’s Tax Tips: Standard Deduction Increase

The government is giving roughly 2/3 of taxpayers a way to save a little money, whether it be getting more back from Uncle Sam or owing him less come Tax Day.

FOX Business Network’s Tracy Byrnes has another of her annual tax tips:

More good news from the IRS: the standard deduction has increased for the 2012 tax year, thanks to inflation. ?I’m Tracy Byrnes with the FOX Business Network, here with Tracy’s Tax Tips.

So, the new standard deduction is $11,900 for married couples filing a joint return. ?Now, that’s up $300 from years past. ?For single and married individuals filing separately, it goes to $5,950 – it’s an increase of about $150. ?And for those of you taking care of kids or loved ones on your own, the new head-of-household deduction was raised $200 to $8,700.

Now, remember: You cannot take the standard deduction and also itemize tax deductions on Schedule A. ?You must choose one or the other. ?Now, of course you should choose the method that will lower your tax bill, so run the numbers both ways. ?If you’re renting an apartment and you didn’t make a lot charitable contributions last year, the standard deduction might be more beneficial.

Nearly two out of three taxpayers take the standard deduction, rather than itemizing.