What deductions can be claimed when taxpayers file an itemizated tax return?
All taxpayers are entitled to file an itemized deduction as an alternative to claiming a Standard Deduction. It would be more prudent to file an itemized deduction whenever the amount of these deductions exceed the standard deductions allowable as this would provide more deductions and hence a bigger refund or a lower tax liability!
Currently, the IRS tax code allows the following items to be deducted under the itemized election method.
1. MEDICAL EXPENSES
-Medical, dental, and other Medical professional fees.
-Other health care costs.
(Only the excess of the amount that exceeds 7.5% of the AGI are deductible).
-State and local income taxes or State and local Sales taxes, whichever is greater.
-Real estate (property) taxes.
-Personal property taxes (such as motor vehicle registration fees).
3. INTEREST EXPENSES
-Interest paid on a home mortgage.
-Interest paid on a home equity loan.
-Points paid on purchasing a home.
-Interest paid on investments (such as margin interest),
(The Investment interest deduction is subject to taxpayers extent of investment income).
4.CONTRIBUTIONS TO CHARITY
-Cash contributions to charities and churches.
-The fair market value of non-cash contributions to charities and churches.
5.CASUALTY AND THEFT
-Personal losses because of theft or casualty.
(Only the excess of the amount that exceeds 10% of the AGI and a $100 floor per item are deductible).
-Unreimbursed employee expenses, i.e. union dues,job travel expenses,job-related education & professional development.
-Home office expenses.
-Tax preparation fees.
-Investment fees & expenses (such as IRA custodial fees & annual brokerage fees).
-Safe deposit box fees.
-Gambling losses (only to the extent of gambling winnings).
(Only the excess of the amount that exceeds 2.0% of the AGI are deductible).