Itemized Deductions - Schedule A in header of articles
Itemized Deductions - Schedule A in content page of articles
You must either lower your taxable income or increase your allowable deductions to reduce your tax bill. Among the many ways you can lower your taxable income:
Take a pay cut
Contribute to a retirement plan
Claim itemized deductions
You might be able to save 10-35 cents for every dollar you decrease your taxable income by claiming itemized deductions. The amount you save depends on your tax bracket.
Medical and Dental Expenses
Medical expenses include some expenses you pay out-of-pocket for medical care. However, for medical expenses to be deductible, they must:
Total more than 7.50% of your adjusted gross income (AGI)
Not be reimbursed in any manner, such as by an insurance company
To learn more, see the Medical and Dental Expenses tax tip.
Real Estate and Personal Property Taxes
You can deduct the state, local, and foreign real-estate taxes you pay under certain conditions on your:
These conditions must be met to deduct the tax. The tax must be:
Levied for the general public welfare
Based on the assessed value of the property
A uniform tax against all property in the jurisdiction of the taxing authority
You can also deduct the tax you pay on personal property, like your car. To be deductible, a personal property tax must be ad valorem. So, it must be:
Based upon the value of the item
Imposed on personal property located in the United States
To learn more, see the Real Estate and Personal Property Taxes tax tip.
Mortgage Interest Paid
If you itemize deductions, you can deduct qualified mortgage interest on your main home and a second home. You must be legally liable for repayment of the loan to deduct the loan interest.
You can deduct the interest:
On the mortgage you pay to the bank or mortgage company on your main home and a second home. Dollar limitations on mortgage loans apply.
You pay to an individual, like the home’s seller, if they financed the sale. As long as the loan is secured by your main home or a second home, the interest is deductible.
To learn more, see the Interest on Home Mortgage tax tip.
Deductible Investment Interest
When you borrow money to invest, the interest you pay on the loan is deductible. However, the investment interest you can deduct can't be more than the amount of investment income you report.
To learn more, see the Investment Interest Paid tax tip.
Deductions Subject to the 2% Limit
Some deductions, known as miscellaneous deductions, are subject to a 2% limit. So, they must add up to more than 2% of your adjusted gross income (AGI) before you can deduct them.
To learn more, see the Deductions Subject to the 2% Limit tax tip.
You can deduct money and non-cash donations you make to qualified organizations. Money donations are donations that you make using:
Automatic withdrawals from your bank account
Non-cash donations are donations of some types of goods, including:
You can also deduct mileage that you drive if it's directly related to charitable work.
To learn more, see the Charitable Donations tax tip.
State and Local Sales Taxes and Income Taxes
You can deduct 1, but not both, of these:
State and local income taxes
State and local sales taxes
You must claim the deduction in the year you paid the taxes.
To learn more, see the State and Local Taxes tax tip.
Other Miscellaneous Expenses
Some amounts you enter on Schedule A don't fall under any categories listed above. These are listed as miscellaneous expenses that aren't subject to the 2% limit. An example of this type of expense would be gambling losses. Your losses are limited to your gambling winnings.
Ex: If your winnings totaled $100, you can deduct up to $100 in losses.