Improved Version Available: An updated version of this article is available. Please view Itemized Deductions.
Itemized Deductions(Form 1040 Line 40, and Schedule A)
Like the various adjustments to income (lines 23 to 36), itemized deductions provide a way for you to convert your otherwise taxable income into nontaxable income provided that you spend your money on various tax-privileged items. You can deduct from taxable income any money you spend on health care, state and local taxes, mortgage interest, charitable donations, and tax preparation fees. Covering the various ins-and-outs of itemizing can get rather detailed, but here's the big picture.
First, get out a Schedule A (PDF). This is the form where you tally up your various tax deductions item by item. What we want to look at is all the categories of things you can spend your money on and receive a deduction on your tax return.
You can claim an itemized deduction for:
- Medical, dental, prescription drugs, and other health care costs,
- State and local income taxes or state and local sales taxes,
- Real estate (property) taxes,
- Personal property taxes (such as motor vehicle registration fees),
- Interest paid on a home mortgage,
- Interest paid on investments (such as margin interest),
- Cash contributions to charities and churches,
- The fair market value of non-cash contributions to charities and churches,
- Personal losses because of theft or casualty,
- Job-related expenses that your employer did not reimburse you for,
- Union dues,
- Cost of purchasing or cleaning uniforms,
- Job-related education and professional development,
- Job-related travel,
- Home office expenses,
- Tax preparation fees,
- Investment fees and expenses (such as IRA custodial fees and annual brokerage fees)
- Safe deposit box fees,
- Gambling losses (only to the extent of gambling winnings).
More detailed instructions for each type of deduction can be found in the Instructions for Schedule A.
Itemized deductions are sometimes limited to a certain threshold amount. And your overall total itemized deductions may be limited.
Tax Forms and Instructions from the Internal Revenue Service:
- Form 1040 (PDF)
- Schedule A (PDF)
- Instructions for Schedule A
- Form 2106 (PDF) for Employee Business Expenses
- Instructions for Form 2106
- Form 8283 (PDF) for Non-cash Charitable Contributions
- Instructions for Form 8283
- Form 8829 (PDF) for Business Use of the Home
- Instructions for Form 8829
- Form 4684 (PDF) for Casualty and Theft Losses
- Instructions for Form 4684