What is the difference between a personal deduction and a standard deduction?

by James S. Anderson, CPA | Mar 07, 2018
askacpaicon

What is the difference between a personal deduction and a standard deduction for an unmarried self-employed woman? My new CPA used a personal deduction the past two years. My income is all royalty income, and I'm 74 years old.

I assume your term “personal deduction” is referring to the personal exemption that can be claimed on Line 42 of Form 1040. The personal exemption in 2017 is $4,050. The standard deduction can be claimed in lieu of itemized deductions you would report on Schedule A. The standard deduction is claimed on Line 40 of Form 1040, and it is $7,900 for single individuals who are at least 65 years old in 2017.

Your 2017 tax return should reflect a standard deduction of $7,900 on Line 40 of Form 1040 (Line 24 of Form 1040-A) and a personal exemption of $4,050 on Line 42 of Form 1040 (Line 26 of Form 1040-A).

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: James S. Anderson, CPA, is with Campbell, Rappold & Yurasits LLP in Allentown, Pa.

Disclaimer
The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
Financial FAQs

Search the most frequently asked finance and accounting questions and read the responses from PICPA members. Always consult a CPA before taking action.

Search