In this article, we describe a comprehensive guide to the Itemized Tax Deductions For Individuals. This is especially true for people who have high-value, specific expenses that they incur throughout the year. The standard deduction is a fixed amount. However, taxpayers can list actual expenses, such as medical costs, mortgage interest, charitable contributions, state and municipal taxes and many more. Although itemizing may require more work, you can save a lot of money if the expenses that qualify for a deduction exceeds the standard threshold.
For many individuals–especially homeowners, those with large medical bills, or generous donors–itemizing is the smarter financial move. You can take control over your taxes by itemizing. This allows you to claim the actual costs that you have incurred, rather than accepting a deduction that is too small. To do it effectively, however, you will need to know what is eligible, maintain proper documentation and keep in mind IRS restrictions and tax laws, such as those implemented under the Tax Cuts and Jobs Act.
This guide will walk you through some of the most popular itemized deductions. We’ll also give tips to help decide whether or not itemizing is better than taking the standard deduction. Understanding itemized deductions will help you maximize the tax benefits you are legally entitled to, and keep more money where it should be. These are the most common Itemized Tax Deductions For Individuals in the USA.
Medical Expenses
1. Medical and dental costs: You can deduct expenses that exceed 7.5% of your adjusted gross income.
2. You can deduct prescription medication expenses.
3. Medical mileage can be claimed at 20 cents a mile.
Taxes
1. State and Local Income Taxes: You can deduct state and local taxes up to $10,000.
2. Real Estate Taxes: You can deduct real estate taxes up to $10,000.
3. Taxes on personal property: These taxes are deductible.
Interest Charges
1. Mortgage interest. Interest can be claimed on the primary or secondary home up to $750,000.
2. Home equity interest. Interest can be deducted on home equity loans up to $100,000.
3. Investment Interest: You can deduct interest on your investments.
Contribution to Charitable Funds
1. Donations of cash: You can deduct donations made to charities that qualify.
2. You can deduct donations of clothing, household goods and other non-cash items.
3. Mileage can be claimed at the rate of 14 cents a mile for charitable works.
Losses due to Casualty or Theft
1. You can deduct personal property losses due to vandalism or theft.
You can deduct losses due to vandalism or theft of business property.
Miscellaneous Itemized Deductions
1. Employee expenses that are not reimbursed: You can deduct employee-related costs up to a limit of 2% AGI.
2. Tax preparation fee: You can deduct the fees you pay for tax preparation.
3. You can deduct the fees you pay for safe deposit boxs.
Phase-outs and Limitations
1. Limitation on itemized deductions for individuals with high income.
2. Limitation on state and local taxes (SALTs): The total amount of local and state taxes is limited to $10,000.
3. Limitation on mortgage interest: The maximum amount of interest that can be charged is $750,000.
Keep accurate records, and speak to a professional tax advisor to make sure you are taking full advantage of the itemized deductions that you can claim.
What are itemized tax deductions?
You’ll have to decide whether you want to itemize your deductions or take the standard tax deduction when filing your return. You can itemize your expenses in order to lower your taxable income and potentially save more money.
It is true that itemizing can require more work, but it’s worth the effort for those with large medical costs, high mortgage payments, or charitable donations.
The article below will explain itemized deductions and what they are.
Individual Itemized Deductions
Individual Tax Deductions for USA is a list of specific expenses which you can deduct from your AGI to reduce your taxable income. The IRS allows you to deduct certain expenses from your adjusted gross income (AGI) in order to lower your taxable income.
Standard Deductions and Itemized Deductions
When it comes to tax deductions, the IRS gives you two options:
- Standard deduction A set amount of tax based on the filing status.
- Deductions Itemized- List of expenses you can deduct individually.
| File Status | Standard Deduction (2019) |
|---|---|
| One-Sided | $13,850 |
| Filing jointly by a married couple | $27,700 |
| Head of the Household | $20,800 |
| Married Filing Separately | $13,850 |
Do You Have To Itemize Your Deductions? If your eligible expenses are greater than the standard deductibility for your tax status, you should itemize your deductions.
You can save more by itemizing your deductions than taking the standard $13,850 deduction if you’re single.
Itemized deductions
You may qualify for the following tax itemized deductions:
1. Medical and dental expenses
You can deduct:
- Hospitalization, doctor visits and surgeries
- Prescription drugs
- Medical equipment is medical devices (wheelchairs, hearing aids etc.).
Ex: For example, if your AGI exceeds $50,000 you may be able to deduct any medical costs exceeding $3.750.
2. State and local taxes (SALT deduction)
The state, local, income and sales taxes can be deducted up to 10,000 ($5,000 for married couples filing separate returns).
3. Mortgage Interest Tax Deduction
You can claim mortgage interest for up to 750,000 dollars of debt (or $1 million, if you took the loan before December 15, 2017).
Ex: You can claim a deduction for the amount you paid in interest on your mortgage.
4. Donations to Charities
Tax deductions are available for donations to charities that meet certain criteria.
- Donations of Cash
- Clothing or other household items can be donated
- Donations of Vehicles
For example: You can claim the entire amount of $2000 you donate to charity (with appropriate documentation).
5. Student Loan Interest Tax Deduction
You may be eligible to take a deduction for up to $2,500 of interest you paid during the course of the year.
6. Theft and Casualty Losses
Natural disasters such as hurricanes, wildfires and floods can cause losses. If they happen in an area declared a disaster by the federal government, then you may be eligible for a deduction.
7. Gambling Losses
The amount you can claim as a deduction for losses from gambling is limited to your winnings from gambling.
A Step-byStep Guide for Itemizing Deductions
Step 1: Decide if itemizing is worth it
Comparing your estimated itemized tax deductions with the standard deductibility.
Gather documentation
- Recipients of medical bills, donations to charity, and mortgage interests
- Statements of bank accounts or cancelled checks
- Tax documents (W-2, 1098 mortgage interest form, etc.)
Step 3: Use IRS form 1040 with Schedule A
Complete Schedule B when you submit your tax returns. This is where you will report any itemized deductions.
Step 5: Estimate Your tax savings
Calculate your taxable income by subtracting your total itemized deductions, from your gross adjusted income.
Step 5: Filing Your Tax Return
To ensure accuracy, you can electronically file or consult a professional.
Itemized tax deductions FAQ
1. Does itemizing your deductions make more sense than taking the standard tax deduction?
It depends! It depends!
2. How much can I deduct in total?
The total limit is not set, however, certain deductions are capped (e.g. the SALT tax deduction is limited at $10,000).
3. Do I need to itemize my deductions if I’m married and filing separate returns?
If one spouse itemsizes their deductions then the other spouse must itemize as well.
4. Do I have to choose between the standard and itemized deductions when claiming my tax?
You must pick one of the two.
5. What happens if I mistakenly itemize my deductions?
You can correct any errors on your return by using the Form 1040X.
Last Thoughts
Taxpayers can reduce their tax liability and save money by itemizing deductions. It is important to keep careful records and compare it with the standard tax deduction in order to determine if this option is the most beneficial.
If you have high medical bills, mortgage interest, or Visit TaxLawsInUSA.com for expert tax advice on Itemized Tax Deductions For Individuals.
