Which of the following statements is true regarding tax deductions?

The statement regarding tax deductions that is true is that taxpayers must choose between standard deductions and itemizing. This reflects the tax system in which individuals can either take the standard deduction—a flat dollar amount set by the IRS based on filing status—or they can itemize their deductions, which involves calculating individual deductible expenses such as mortgage interest, state taxes, and charitable contributions.

Taxpayers typically evaluate which option provides a better tax outcome for them. If itemizing deductions results in a deduction greater than the standard amount, then it may be more advantageous to itemize. Alternatively, if the standard deduction exceeds the total of available itemized deductions, it is beneficial to simply take the standard deduction. Thus, the necessity to choose one method over the other is a fundamental rule in the tax filing process.

The other statements present misconceptions about tax deductions. For instance, while some taxpayers may find that the standard deduction is higher than their itemized deductions, this isn’t universally true, as there are situations where itemizing can yield a greater total deduction. The idea that tax deductions increase taxable income is inherently incorrect since deductions serve to reduce taxable income. Lastly, it's inaccurate to state that taxpayers can take both deductions simultaneously, as the system requires a choice between the two.