What does the IRS standard deduction amount mean?

Question

http://www.moneycrashers.com/reselling-vs-donating-tax-deduction/

Apart from the personal satisfaction you get from helping a nonprofit, donating your extra stuff can land you a valuable tax deduction. In order to get one, you have to itemize all your deductions – but that only makes financial sense if they exceed the IRS standard deduction amount, which is $6,200 for individuals and $12,400 for married couples.

To check if it makes sense to itemize, take a look at IRS Schedule A and see what applies to you. State income tax, property taxes, and mortgage interest are the big-ticket deductions for the majority of taxpayers. If you don’t have any of these, itemizing may not increase your deduction – and if you don’t itemize, you can’t claim a charitable deduction.

• If I don't have other things but donations to itemize, does "but that only makes financial sense if they exceed the IRS standard deduction amount, which is $6,200 for individuals" mean that the total value of my donations must exceed $6200 before it can be used to offset my tax?

• Why "State income tax, property taxes, and mortgage interest are the big-ticket deductions for the majority of taxpayers. If you don’t have any of these, itemizing may not increase your deduction"?

Answer 1

If I don't have other things but donations to itemize, does "but that only makes financial sense if they exceed the IRS standard deduction amount, which is $6,200 for individuals" mean that the total value of my donations must exceed $6200 before it can be used to offset my tax?

Yes. You get to deduct the larger of either your itemized deductions or your standard deductions. If the total of your itemizable deductions is smaller than the standard deduction, you will pay more if you itemize (although you can still do it if you are a financial masochist). If you don't have any deductions other than donations, then your donations alone would have to total more than the standard deduction for you to gain by itemizing.

Why "State income tax, property taxes, and mortgage interest are the big-ticket deductions for the majority of taxpayers. If you don’t have any of these, itemizing may not increase your deduction"?

Because those are the ones where you are likely to pay a lot of money. The more money you spend on deductible expenses, the greater your deductions, and so the greater the likelihood that your deductions will add up to more than the standard deduction.

Also, some of the deductions are limited to amounts over a certain threshold. For instance, you can generally only deduct the portion of your medical expenses that exceeds 10% of your adjusted gross income. If you didn't spend a large amount of money on medical expenses, you probably can't deduct anything here. This means that, for many kinds of potential deductions, you often won't actually be able to deduct anything at all, because your expenses in that area weren't high enough.

Answer 2

Essentially, the idea behind the standard deduction is this:

The tax code assumes that everyone has some deductible expenses: charitable contributions, taxes, etc. Rather than force lower income tax payers to keep track of everything, they can take the standard deduction, which is just an amount that it is assumed you have in deductible expenses. If you have more deductible expenses than are covered by the standard deduction, you can declare this by itemizing your deductions on your tax form.

Many people think that if they don't have enough deductions to itemize, that they are getting a raw deal, because their charitable contributions and other deductions don't count. That's not really true, however, because with the standard deduction, they get to deduct more than they actually have in deductible expenses.

If you do choose to itemize, you don't get the standard deduction, so you do get to deduct every dollar you donate. But if you don't itemize, don't think of your donations as a waste; think of the standard deduction as being able to deduct extra. You shouldn't be donating solely for a tax deduction anyway.