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A guide to itemized deductions
Schedule A allows you to itemize deductions instead of taking the standard deduction
Only a small percentage of taxpayers should itemize
Common itemized deductions are for significant medical expenses, mortgage interest, and charitable contributions
Some deductions require you to complete additional tax forms
Schedule A is a tax form that you attach to your main tax return if you want to itemize your deductions instead of taking the standard deduction.
An itemized deduction is an expense or loss of money that the federal government allows you to exclude (deduct) from the annual income that you will be taxed on (your taxable income). There are only a handful of possible itemized deductions. Some of the popular ones are for medical expenses, state and local taxes you have already paid, mortgage interest, and charitable contributions.
You should generally only itemize if your total itemized deductions would be worth more than your standard deduction, which starts at $12,400 for single filers and $24,800 for joint filers for the 2020 tax year (2021 standard deductions will go up to $12,550 for single filers and $25,100 for joint filers). Only about 10% of taxpayers will likely benefit from itemizing deductions after the 2017 tax reform. That means most people will not have to use Schedule A at all.
If you want more guidance on how to file your tax return, start with our guide to filing your taxes in 2020.
You should only itemize if your total itemized deductions are worth more than your standard deduction. The standard deduction is available to all taxpayers and how much you get depends on your age, filing status, and whether or not you are blind.
|Filing status||Standard deduction amount|
|Married filing jointly||$24,800|
|Married filing separately||$12,400|
|Head of household||$18,650|
These deductions apply to your 2020 taxes, which you will file in early 2021. Even if you don’t qualify to itemize one year, you could qualify the next year because of a big change in your spending. One example is if you have hihgh medical bills one year.
|Filing status||Standard deduction amount|
|Married filing jointly||$25,100|
|Married filing separately||$12,550|
|Head of household||$18,800|
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Joint filers get an additional $1,300 for each spouse who is either over age 65 or blind. Single filers and heads of household get an additional deduction of $1,650 if they’re blind or over 65.
There are not many things you can itemize and deduct on Schedule A. The seven most common itemized deductions include the following:
There are also some other miscellaneous losses and payments you may be able to deduct, like gambling losses, federal estate tax you paid on someone else’s income, casualty and theft losses from an income-producing property, amortizable bond premiums you’ve paid, and losses from inflation-indexed investments such as Treasury inflation-protected securities (TIPs). You can learn more about these miscellaneous itemized tax deductions in the IRS instructions for Schedule A.
Remember that you only need to consider itemizing if the total of these deductions is greater than your standard deduction. If you’re filing back taxes from a previous year, make sure to use Schedule A from the correct year. The form was changed in 2017.
At the top of Schedule A is a line for your name and Social Security number (SSN). Make sure to write your name the same as on your Form 1040. If you’re filing a joint return, write both names and SSNs in the same order as on your 1040.
Schedule A has 18 lines, which are divided into seven sections based on the types of itemized deductions you can take.
(Read about how to fill out the rest of your Form 1040.)
The first four lines are for the medical expense deduction. You can deduct medical expenses that are worth more than 7.5% of your AGI. (Per recent changes to the law, this threshold will increase to 10% starting tax year 2021.)
Line 1 asks for your total medical and dental expenses from the year. Line 2 is for your AGI, which you can find on Form 1040 Line 8b. Line 3 of Schedule A asks you to multiply your AGI by 7.5% (0.075) to find the threshold for your expenses. Line 4 is where you calculate your total deduction by subtracting line 3 (7.5% of your AGI) from line 1 (your total medical expenses).
Line 5, which has five parts, looks at state and local income tax (SALT) that you have already paid. This is also called the SALT deduction. Everyone can include real estate taxes and personal property taxes they’ve paid, but must then choose between including the value of their local income taxes or sales taxes. The SALT deduction is limited to $10,000 for everyone except those using the married filed separately status, who have a $5,000 limit.
Line 6 asks for other taxes you have already paid, such as income taxes you paid to a foreign country, or federal gift tax.
Line 7 asks for your total deduction by adding up your totals from lines 5 and 6.
This section allows you to deduct two types of interest you may have paid: mortgage interest and investment interest.
Line 8 helps you calculate your mortgage interest deduction. If you paid mortgage interest or points during the tax year, you can probably find the total you paid on a Form 1098 from your mortgage lender. Line 9 considers interest you paid on a loan for an investment property. You will need to complete Form 4952 if you paid this type of interest. Line 10 is for your total deduction from this section of the form.
This section looks at your charitable contributions, which are officially called gifts to charity. You generally can’t include contributions that earned you a tax credit from your state or local government.
Line 11 is for the total charitable contributions you made in the form cash or a check and line 12 is for the value of your noncash gifts. Any individual donations worth more than $250 require a statement from the organization to prove the value of your donation. Any individual donations worth more than $500 require you to complete Form 8283 and attach it to your tax return.
Line 13 is for any charitable contributions you’re carrying over from the previous year, and line 14 is where you add up your total deduction for this section.
Learn more about the charitable contributions deduction.
Line 15 is for losses you incurred from personal casualty or theft, but only if they occurred from a federally declared disaster. You can only report individual casualty and theft losses that were worth more than $100. You total losses above that $100 limit must also be more than 10% of your AGI in order or you to claim any deduction. You need to attach Form 4684 if you have any losses to report.
If you have other major losses or payments for the year, they may qualify to itemize in this section. Line 16 is where you list what these expenses are and write their total value.
Examples of what you may be able to deduct include gambling losses, casualty and theft losses from an income-producing property you own, unrecovered investments in a pension, and impairment-related work expenses if you have a disability. To learn about other itemizable deductions, see the IRS instructions for Schedule A.
(Itemizing deductions doesn’t do a whole lot to help individuals with disabilities, so consider disability insurance for further financial protection.)
Line 17 is where you add up the total itemized deductions from each line on this form. Line 18 is just a box that you check if you want to itemize your deductions even though the standard deduction is worth more (something we do not generally recommend).
Derek is a tax expert at Policygenius in New York City. He has written about multiple personal finance topics in the past, and his work has been covered by Yahoo Finance, MSN, Business Insider and CNBC.
Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.
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