Itemized Deductions

When it comes to preparing and filing your tax return, you probably want to get back the most money possible. Who wouldn’t? One way to do this is to lower your taxable income by claiming itemized deductions.

Claiming an itemized deduction only makes sense in specific cases.

An itemized deduction differs from a standard deduction and knowing which one will get you the bigger return requires a little digging. At the end of the day, the question is, which one lowers your taxable income more?

Standard deductions are much more common. Why? If you don’t own a home and you’re not claiming any major, often unexpected, expenses, a standard deduction usually gets you the bigger return. In 2017, standard deductions are:

  • For single or married filing separately — $6,350
  • For married filing jointly or qualifying widow(er) — $12,700
  • For head of household — $9,350

In addition, your standard deduction increases if you’re blind or age 65 or older. For those individuals, it increases by $1,550 if you’re single or head of household and by $1,250 if you’re married or a qualifying widow(er).

However, there are times when itemizing your deduction will get you a bigger return.

Why Should You Itemize Deductions?

Typically, itemized deductions make sense if the total amount you’re deducting exceeds the amount of your standard deduction. In other words, did your qualifying expenses exceed your standard deduction?

So, if you’re asking, “should I itemize my deductions?” see if any of these examples apply:

  • Had large, uninsured medical or dental expenses
  • Paid mortgage interest and real estate taxes on your home
  • Had large, unreimbursed expenses as an employee
  • Had a large, uninsured casualty (fire, flood, wind) or theft losses
  • Made large contributions to qualified charities

Expenses You Can Itemize

Claim itemized deductions using Form 1040 with Schedule A. This can be as long or as short as it needs to be, but should accurately reflect the expenses you incurred for the year you’re filing.

There are plenty of items you can deduct, ranging from substantial medical expenses to charitable donations.

Medical and Dental

If you had any major, uninsured medical or dental expenses, you can include them in your itemized deduction, but only the amount that exceeds 10% of your adjusted gross income (AGI). As long as they weren’t reimbursed in any way, you’re clear to deduct qualifying medical and dental expenses.

Real Estate, Mortgages, and Personal Property

Real estate and personal property taxes are other expenses you can itemize. Under certain conditions, you can deduct the state, local, and foreign real estate taxes you pay on your home or condominium. You can also itemize personal property taxes, which you likely pay if you own a car.

Investments

When you borrow money to invest, you can deduct the interest you pay on the loan up to the amount of income from the investment.

Charitable Donations

You can deduct monetary donations you make to qualified organizations. In addition, noncash donations such as clothing and household items are also deductible.

Other Expenses

You definitely don’t want to overlook any itemized deductions that might get you a bigger return. Other expenses can include gambling losses, losses due to theft, unreimbursed work expenses and many others.

For more details on everything you can itemize on your Schedule A, visit our Get Answers page.

Keep Records When You Itemize Deductions

If you’ve decided itemizing your deductions makes the most sense, the next step is to figure out what you’ll need to file. In short—documentation.

Documentation is everything when it comes to tax returns, especially if you’re planning to itemize. Documentation helps show that:

  • You have proof you paid the expenses.
  • You paid the expenses during the year you’re itemizing.
  • The expenses were deductible.

Furthermore, the type of deduction you claimed dictates the kind of documents you’re required to have.

Is Itemizing Right For You?

The experts at H&R Block can look at your personal tax situation and help you decide if itemizing deductions is right for you. And if you’d rather file your taxes yourself, know you are still backed by our 100% accuracy and maximum refund guarantees. In an office or online, don’t just get your taxes done. Get your taxes won with H&R Block.

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