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Standard Deduction

Definition

A fixed amount that reduces your taxable income, available as an alternative to itemizing deductions.

What to consider

  • Know the fixed amount available to reduce your taxable income.
  • Compare it with your potential itemized deductions each year.
  • Stay updated on changes in tax laws that affect the deduction.

Real world scenarios

  • When filing her taxes, Mia opted for the standard deduction, which simplified her return by reducing her taxable income without itemizing individual expenses.

Related terms

Capital Loss
Tax Filing Extension
Tax Return
Itemized Deduction
Tax Status

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Taxes
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