Intuit Academy Tax Practice Exam

Question: 1 / 400

What does a standard deduction do for taxpayers?

It increases taxable income

It reduces taxable income

The standard deduction serves a significant purpose for taxpayers by reducing their taxable income. By lowering the amount of income that is subject to taxation, it enables individuals to retain more of their earnings. This reduction is applied directly to the taxpayer's adjusted gross income, which subsequently lowers the overall tax liability.

For many taxpayers, especially those who do not have sufficient itemizable deductions, taking the standard deduction simplifies the tax preparation process, allowing them to claim a straightforward deduction without needing to track and document various expenses throughout the year. While it does not eliminate tax payments entirely, it provides a foundational tax benefit that can lessen the overall tax burden.

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It complicates the filing process

It eliminates the need for tax payments

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