Chosing to itemize your deductions at tax time can prove beneficial in many ways. When you itemize, you list all of your expenses and amounts paid on Schedule A of Form 1040 when you file your tax return. These expenses can range from medical or dental care and state or local income tax, to mortgage interest and charitable donations.
Once you’ve listed all your expenses and amounts, you should calculate the sum of the list and compare it to the standard deduction that you are eligible for. Obviously, you’ll want to choose the method which offers you the highest deduction, as it will lower your amount of taxable income.
Itemized Deduction Types
There are six different categories of expenses that you are able to deduct using the itemized method:
- Medical and dental expenses
- Interest expenses
- Charitable contributions
- Casualty and theft losses
- Miscellaneous deductions