Itemizing vs. Standard Deduction – 2019
If you filed taxes in 2019, you probably noticed something different on your return. The standard deduction had nearly doubled compared to just a couple of years earlier. This major shift: courtesy of the Tax Cuts and Jobs Act (TCJA): changed the game for millions of taxpayers, especially small business owners and self-employed folks.
So what did this mean for you? And how did you decide whether to itemize or take the standard deduction? Let's break it down.
The Big Shift: What Changed
Before the TCJA took effect, the standard deduction was much lower. Many taxpayers found it worthwhile to itemize their deductions because their eligible expenses exceeded that smaller standard amount.
But starting in 2018 and continuing into 2019, the standard deduction nearly doubled. Suddenly, a lot of people who used to itemize found themselves better off just taking the standard deduction instead.
This wasn't a small tweak: it was a fundamental change in how most Americans approached their tax returns.
2019 Standard Deduction Amounts
Here's what the standard deduction looked like for the 2019 tax year based on your filing status:
| Filing Status | Standard Deduction |
|---|---|
| Single | $12,200 |
| Married Filing Jointly | $24,400 |
| Married Filing Separately | $12,200 |
| Head of Household | $18,350 |
If you were 65 or older or legally blind, you got a little extra:
- Unmarried taxpayers: Additional $1,650
- Married taxpayers: Additional $1,300
These amounts were significantly higher than pre-TCJA levels. For example, in 2017, a single filer's standard deduction was only $6,350. That's nearly half of the 2019 amount.
What Are Itemized Deductions?
Itemized deductions let you claim specific expenses you paid during the year instead of taking the flat standard deduction amount. Think of it as a more detailed approach to reducing your taxable income.
Common itemized deductions in 2019 included:
- State and local taxes (SALT): This covers state income taxes or sales taxes, plus property taxes. However, the TCJA capped this deduction at $10,000 total.
- Home mortgage interest: Interest paid on your primary residence (and sometimes a second home) could be deducted.
- Medical expenses: If your medical bills exceeded 7.5% of your adjusted gross income (AGI), you could deduct the amount over that threshold.
- Charitable donations: Cash or property donated to qualified organizations.
The Simple Math: Which One Should You Choose?
Here's the deal: you can only pick one. You either take the standard deduction OR you itemize. You can't do both.
The decision comes down to simple math: Which option gives you a bigger deduction?
Let's say you were a single filer in 2019. Your standard deduction was $12,200. If your itemized deductions: mortgage interest, property taxes, charitable giving, etc.: added up to $10,000, you'd be better off taking the standard deduction. You'd reduce your taxable income by an extra $2,200.
But if your itemized deductions totaled $15,000? Then itemizing made more sense. You'd save on an additional $2,800 compared to the standard deduction.
It really is that straightforward.
Why This Mattered for Small Business Owners and Gig Workers
If you were running a small business, freelancing, or working as a gig worker in 2019: whether as a realtor, DoorDash driver, photographer, or gym owner: this shift had some interesting implications.
The good news: Your business expenses weren't affected by this change. Business deductions (things like mileage, equipment, home office expenses, and professional services) are claimed separately on Schedule C. They reduce your self-employment income before you even get to the standard vs. itemized decision.
The consideration: Many self-employed folks have simpler personal finances. Without a mortgage or massive charitable contributions, the nearly-doubled standard deduction often made more sense than trying to scrape together enough itemized deductions to beat it.
The SALT Cap: A Game-Changer
One of the biggest factors pushing people toward the standard deduction in 2019 was the new $10,000 cap on state and local tax (SALT) deductions.
Before the TCJA, you could deduct all of your state income taxes and property taxes without limit. If you lived in a high-tax state like California, New York, or New Jersey, this was huge.
But with the $10,000 cap in place, many taxpayers lost a significant chunk of their potential itemized deductions. Combined with the higher standard deduction, this meant that millions of people who previously itemized found it no longer beneficial.
When Itemizing Still Made Sense in 2019
Despite the higher standard deduction, some taxpayers still came out ahead by itemizing. You might have been one of them if:
- You had a large mortgage and paid significant interest
- You made substantial charitable donations
- You had major medical expenses (remember, only the amount exceeding 7.5% of AGI counted)
- You had a combination of deductions that pushed you well past the standard deduction threshold
For example, a married couple filing jointly with $15,000 in mortgage interest, $10,000 in SALT (maxed out), and $5,000 in charitable donations would have $30,000 in itemized deductions: beating their $24,400 standard deduction by $5,600.
The Bottom Line for 2019
The 2019 tax year represented a new normal. The nearly-doubled standard deduction simplified things for many taxpayers while reducing the benefit of itemizing for others.
For small business owners and self-employed individuals, the key was understanding that business deductions and personal deductions are two separate conversations. Your Schedule C expenses didn't change: but how you approached your 1040 might have.
Need Help Sorting Out Your Deductions?
Whether you're looking back at past returns or planning ahead, understanding the interplay between standard and itemized deductions is crucial for minimizing your tax bill.
At Small Business Tax Solutions, we specialize in helping sole proprietors, single-member LLCs, and gig workers navigate these decisions with confidence. No judgment, just clear guidance tailored to your situation.
Have questions? Reach out to us today and let's make sure you're keeping more of what you earn.
