What Are Itemized Deductions?

An itemized deduction is an expense that can be subtracted from your adjusted gross income (AGI) to reduce your taxable income and lower the amount of taxes you owe. Taxpayers can itemize deductions like 澳洲幸运5官方开奖结果体彩网:mortgage interest, charitable gifts, and unreimbursed medical expenses, or choose to take the 澳洲幸运5官方开奖结果体彩网:standard deductionꦓ, a fixed dollar amount that varies by filing status.

Understanding Itemized Deductions

Itemized deductions reduce your 澳洲幸运5官方开奖结果体彩网:taxable income, and your savings depend on your 澳洲幸运5官方开奖结果体彩网:tax bracket. Suppose an unmarried single filer with a 澳洲幸运5官方开奖结果体彩网:gross income of $80,000 claims itemized deductions totaling $15,000. Subtracting those deductions from gross income yields a taxable income of $65,000, which falls within a 22% marginal tax rate bracket for 2024 and 2025.

Itemized deductions are recorded on 澳洲幸运5官方开奖结果体彩网:Schedule A of 澳洲幸运5官方开奖结果体彩网:Form 1040. Taxpayers must save all receipts and documentation of expenses reported in case the Internal Revenue Service (IRS) requests them in an audit. Additional proof can include bank statements, insurance bills, medical bills, and tax receipts from qualified charitable organizations.

Itemized Deduction vs. Standard Deduction

The majority of taxpayers have the option to itemize deductions or claim the standard deduction. Nonresident aliens must itemize, and 澳洲幸运5官方开🐬奖结果体彩网:married individuals who are filing separately each must claim the same type of deduction.

The decision depends on which deduction type garners the lowest 澳洲幸运5官方开奖结果体彩网:tax liability. If you file as a single taxpayer or are married and filing separately, you will fare better with the standard deduction of $14,600 for 2024 and $15,000 for 2025 if your itemized deductions total less than that amount.

What Can I Itemize?

The list of expenses that can be itemized is extensive and can include some medical expenses, mortgage interest, charitable contributions, and state and local taxes. You can on the IRS website. Taxpayers use Schedule A, part of IRS Form 1040, to calculate and list deductions.

Schedule A can be downloaded from the .

You can deduct mortgage interest on a loan of $750,000 or less for a home bought on or after Dec. 16, 2017, and charitable donations of up to 60% of your AGI but it depends on the type of contribution and the charity.

You can also deduct qualified, unreimbursed medical and dental expenses over 7.5% of AGI; state and local income or sales taxes plus real estate and personal property taxes up to $10,000 or $5,000 if married filing separately, 澳洲幸运5官方开奖结果体彩网:gambling losses, and investment interest less than investment income.

The Bottom Line

An itemized dedꦉuction is an expense that can be subtracted from your adjusted gross income (AGI) to reduce your tax bill. Taxpayers can itemize deductions or claim the standard deduction that applies to their filing status. Itemized deduc♔tions must be listed on Schedule A of Form 1040 and may include mortgage interest, charitable gifts, and unreimbursed medical expenses.