How to Itemize Deductions on Taxes

Itemizing your deducations could result in a bigger tax break than simply taking the standard deduction.

Itemizing deductions can sometimes add up to more than the standard deduction that all people are entitled to. If you have enough deductions, you could lower your tax liability and maybe even see a refund in your future. Learn how to itemize deductions on your taxes so that you get every tax advantage that there is to lower your tax liability. Itemize deductions to see if you would be better off itemizing or using the standard deduction. You always want to use the higher dollar amount between the two.

Things You'll Need

• Schedule A

Instructions

1. Calculate medical and dental expenses on line 1 of Schedule A. Look at the last line on the front page of your 1040 form. This is your Adjusted Gross Income, or AGI. You can only claim expenses that exceed 7.5 percent of that amount. When you add up your medical and dental expenses, you must read the Schedule A publication (See the Reference section) to see what is allowed and not allowed to include. Example: Add all of your qualifying medical and dental expenses together and enter on line 1. Enter your AGI from the 1040 form on line 2. Line 2 is then multiplied by .075 (7.5 percent) and entered on line 3. Line 4 is the total after you subtract the amount on line 3 from the amount on line 1.

2. Enter any local and state taxes you paid the prior year on line 5. On line 6, enter your real estate (property taxes). If you have personal property taxes, that amount is entered on line 7. Any other taxes you have paid are entered on line 7 with an explanation. Line 9 is the total of lines 5, 6, 7 and 8.

3. Calculate your interest paid for a home mortgage and enter it on line 10. If you have more interest for a mortgage that is not reported on a 1098, you will enter that amount on line 11. Line 12 is for any points paid that were not included with the 1098. Line 13 is for a qualified insurance for a mortgage and line 14 is for any investments. Add the totals of lines 10, 11, 12 and 14, and enter that total on line 15.

4. Include any charitable contributions on lines 16, 17 and 18 of the Schedule A. Total the amount of these lines and enter that amount on line 19.

5. Enter any theft and casualty losses that are entered on Form 4684 on line 20.

6. Calculate any miscellaneous and job expenses that qualify as an itemized deduction. This includes union dues, education for your job and travel for your job that is not reimbursed. Tax preparation fees can be added on line 22. Other expenses on line 23 may include a safety deposit box or an investment. You must specify what the expense is. You must add lines 21, 22 and 23 together, and enter on line 24. On line 25, enter the amount of your AGI from the 1040. Line 26 is the total of line 25 multiplied by .02 (2 percent). Line 27 is the total of the section after subtracting line 26 from line 24.

7. Enter any other deductions that qualify on line 28 and enter a description. Line 29 is the total of lines 4, 9, 15, 19, 20, 27 and 28. You will then enter this amount on line 40 of Form 1040, which should be labeled "Itemized Deductions".

Tips & Warnings

• Always read the instruction booklet to make sure you are getting all of your qualified deductions and not claiming something that is not allowed.

References

• IRS.gov: Itemized Deductions Schedule A Instructions
• IRS.gov: Schedule A