Itemized deduction

• Only a taxpayer eligible for the standard deduction can choose it.
• U.S. citizens and aliens who are resident for tax purposes are eligible to claim the standard deduction. Nonresident aliens are not eligible.
• If the taxpayer is filing as "married, filing separately", and his or her spouse itemizes, then the taxpayer cannot claim the standard deduction. In other words, a taxpayer whose spouse itemizes deductions must either itemize as well, or claim "0" as the amount of the standard deduction.
• The taxpayer must have maintained the records required to substantiate the itemized deductions.
• If the amounts of the itemized deductions and the standard deduction do not differ much, the taxpayer may take the standard deduction to reduce the possibility of adjustment by the Internal Revenue Service. The amount of standard deduction cannot be changed following an audit unless the taxpayer's filing status changes.
• If the taxpayer is otherwise eligible to file a shorter tax form such as 1040EZ or 1040A, he or she would prefer not to prepare the more complicated Form 1040 and the associated Schedule A for itemized deductions.
• The standard deduction is not allowed for calculating the alternative minimum tax. If the taxpayer claims the standard deduction for regular income tax, he or she cannot itemize deductions for the AMT. Thus, for a taxpayer who pays the AMT, it may be better to itemize deductions, even if it produces a result which is less than the standard deduction.

Examples of allowable itemized deductions

• Medical expenses, only to the extent that the expenses exceed 10% of the taxpayer's Adjusted gross income.. Allowable medical expenses include:
• * Capital expenditures that are advised by a physician, where the facility is used primarily by the patient alone and the expense is reasonable
• * Payments to doctors, dentists, surgeons, chiropractors, psychologists, counselors, physical therapists, osteopaths, podiatrists, home health care nurses, cost of care for chronic cognitive impairment
• * Premiums for medical insurance
• * Premiums for qualifying long-term care insurance, depending on the taxpayer's age
• * Payments for prescription drugs and insulin
• * Payments for devices needed to treat or compensate for a medical condition
• * Mileage for travel to and from doctors and medical treatment
• * Necessary travel expenses
• *Non-deductible medical expenses include:
• ** Over-the-counter drugs
• ** Health club memberships
• ** Cosmetic surgery
• State and local taxes paid, but the entire sum of this category is capped at $10,000 starting in tax year 2018. These include:
• * Either State income tax or state and local general sales taxes paid during the tax year, but not both.
• * Property taxes, including vehicle registration fee, if assessed by reference to the value of the property. This amount is in addition to the previous choice of either income or sales tax.
• * but not including:
• ** Use taxes
• ** Excise taxes
• ** Fines or penalties
• Mortgage loan interest expense on debt incurred to purchase up to two homes, subject to limits
• * Discount points paid to discount the interest rate on up to two homes; points paid upon acquisition are immediately deductible, but points paid on a refinance must be amortized
• Investment interest expenses, up to the amount of income reported from investments; the balance is deferred until more investment income is declared
• Charitable contributions to allowable recipients; this deduction is limited to 30%-60% of AGI, depending on the characterization of the recipient. Donations can be money or goods but the value of donated services provided cannot be deducted. Reasonable expenses necessary to provide donated services such as mileage, special uniforms, or meals can be deducted. Non-cash donations valued at more than $500 require special substantiation on a separate form. Non-cash donations are deductible at the lesser of the donor's cost or the current fair market value, unless the non-cash donation has been held for longer than a year, in which case it can only be deducted at fair market value. If appreciated stock is donated, the deduction is the fair market value of the stock on the date of the donation and the taxpayer never has to pay taxes on the inherent gain.
• *Eligible recipients for charitable contributions include:
• ** Churches, synagogues, mosques, other houses of worship
• ** Federal, state, or local government entities
• ** Fraternal or veterans' organizations
• *Non-eligible recipients include:
• ** Individuals
• ** Political campaigns or political action committees
• Casualty and theft losses, to the extent that they exceed 10% of the taxpayer's AGI, and $100
• * Many areas of Connecticut, New Jersey and New York were declared disaster areas for tax year 2011, after Hurricane Sandy. This facilitated amendments to 2011 tax returns to claim a casualty tax deduction.
• Gambling losses, but only to the extent of gambling income Unused non-professional gambling losses may not be carried forward to subsequent tax years. However, professional gamblers are allowed to deduct losses from other income.

  Miscellaneous itemized deductions (Tax Years 2017 and earlier)

• Job-related clothing or equipment, such as steel-toed boots, hardhats, uniforms, tools and equipment required for work
• Union dues
• Unreimbursed work-related expenses, such as travel or education (repealed, effective January 1, 2018
• Fees paid to tax preparers, or to purchase books or software used to determine and calculate taxes owed
• Subscriptions to newspapers or other periodicals directly relating to one's job

  Limitations