Itemized Deductions

Itemized Deduction

A deduction from one's taxable income as the result of a specific expense the taxpayer has had over the course of the tax year. Most medical expenses, for example, may be deducted from one's taxable income. The same is the case for interest on mortgages and business expenses. The IRS allows itemized deductions as an alternative to the standard deduction, which takes a flat amount out of one's taxable income. Itemized deductions are subject to certain restrictions; for example, some expenses must exceed a certain percentage of the adjusted gross income to be deductible.

Itemized Deductions

Certain personal expenditures allowed by the tax Code as deductions from adjusted gross income. Examples are certain medical expenses, qualified interest on home mortgages, and charitable contributions. Itemized deductions are reported on Schedule A, Form 1040. A taxpayer who itemizes deductions may not claim the standard deduction.
References in periodicals archive ?
A taxpayer %Yin have a tax savings only if the total itemized deductions , mortgage interest, charitable contributions.
Memo 2008-141, the Tax Court found that if the IRS prepares a substitute return because the taxpayer did not file one, then the taxpayer cannot claim itemized deductions.
If the itemized deductions for which you are eligible exceed your standard deduction, it tends to be advantageous to itemize on Schedule A (Form 1040)," explained Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc.
Charitable contributions are generally fully deductible as long as your itemized deductions exceed the standard deduction and you don't surpass statutory limits--50%, 30% or 20% of your adjusted gross income (AGI), depending on what you donate and whether the recipient is a public charity on an operating or non-operating foundation.
And any amounts you pay out toward healthcare expenses are deductible under itemized deductions.
Itemized deductions have to add up to more than the standard deduction.
Studies indicate that, by 2007, almost 95 percent of the revenue from AMT preferences and adjustments will be derived from four items that are "personal" in nature and not the product of tax planning strategies -- the personal exemption, the standard deduction, state and local taxes, and miscellaneous itemized deductions.
If 1993 taxable income for each spouse is between $18,450 and $44,575 (the M/S 28% bracket), and AGI is less than $54,225, the point where itemized deductions are being phased out on separate returns, the taxpayers find themselves in a "neutral zone" where separate returns and joint returns yield the same tax liability as shown in Table 1.
Also, the federal phaseout of exemptions and itemized deductions for high-income taxpayers insidiously increase the marginal tax rates.
President Obama today reiterated the importance of tax policy in promoting homeownership but endorsed limiting itemized deductions, including the mortgage interest deduction.
The error is on early versions of Schedule CA 540), California Adjustments, which is used to make adjustments to federal adjusted gross income and claim federal itemized deductions.