Taking the standard deduction is one of the simplest ways to lower your tax burden. Can the self-employed take the standard deduction? Read on to learn more it.
The standard deduction lets you deduct a set amount from your taxable income. You can also do an itemized deduction. But, that's often more complex and time-consuming.
The standard deduction is much easier to calculate than itemizing your deduction. Roughly 70 percent of taxpayers take the standard deduction.
For 2018 tax year, the standard deduction is:
Yes, the self-employed can claim the standard deduction on Form 1040, Line 40. If you are blind or aged 65 or older, you may be able to qualify for a higher standard deduction. You may want to itemize your deductions if it exceeds the standard deduction amount. In this case, you can lower your taxable income by the total amount of all itemized expenses. These expenses can range from medical expenses to charitable contributions. If you opt to itemize your deductions, you will need to list the itemized expenses on Schedule A of Form 1040. Add up the total of the itemized expenses, subtract the total from your income. This figure is your taxable income. Compare the amounts to see which deduction you should take. Taxpayers can claim either deduction, but not both.
Most taxpayers who don't claim itemized deductions are eligible to take the standard deduction. The self-employed are also eligible to claim the standard deduction. You can claim the standard deduction and still deduct business expenses on Schedule C. You cannot take the standard deductions if:
For more information on standard and itemized deduction exclusions, see IRS Topic 501. Many taxpayers are eligible for both the standard deduction and itemized deductions. In this case, choose the deduction type that yields the highest tax savings.