Itemizing Deductions: It’s in the Details

There are two methods you can use to deduct expenses at tax time: you can either itemize or utilize the standard deduction. Deductions decrease your taxable income, lowering your tax threshold.

The standard deduction amount is different depending on factors such as filing status, taxpayer age, and income levels, and is revised annually.

There are certain individuals who are not eligible to take the standard deduction:

  • A married person who files separately from a spouse who chooses to itemizes deductions.
  • An individual who files a tax return for an amount of time less than 12 months as a result of a modification in his/her annual financial accounting.
  • An individual who had been a nonresident alien or a dual-status alien throughout the year. Nonresident aliens who’re married to a U.S. citizen or resident alien at the conclusion of the year and who decide to be handled as U.S. citizens for tax purposes may get the conventional deduction.
  • Taxpayers involved in estates, trust funds, or partnerships

It’s recommended that you itemize if the total amount of your deductions are higher than your standard deduction or if you are required to itemize due to non-eligibility for the standard deduction.

You may well be able to reduce your tax by itemizing deductions on Form 1040, Schedule A. Itemized deductions contain amounts you paid in both state and local sales tax or income fees, real-estate fees, mortgage home fees, mortgage interest, and disaster losses. You may even take into account any gifts to charity and the amount you covered of medical and dental expenses. You’d generally gain a better benefit by itemizing if you:

  • Cannot utilize the standard deduction
  • Had big medical and dental expenses not covered by insurance
  • Covered interest or fees on your house
  • Had big unreimbursed expenses for your business or employment
  • Had big uninsured casualty or theft,
  • Gave large charitable donations

If you chose to itemize, your deductions may have a set maximum, and your total amount may be subject to a gradual reduction, known as a phase-out if your adjusted gross income exceeds the limits set for each filing status as follows:

  • Single – $254,200
  • Married filing jointly or qualifying widow(er) – $305,050
  • Married filing separately – $152,525
  • Head of household – $279,650

Check the instructions listed in the Form 1040 Directions or Form 1040, Schedule A Directions for the threshold limits.

You can determine whether or not you’re itemized deductions will be phased out by using the Itemized Deductions Worksheet-Line 29 in the Form 1040, Schedule A Directions.