Itemized Deduction of Individual Returns

For individual taxpayers, Schedule A (Itemized deduction) is used in conjunction with Form 1040 to report itemized deductions. If you choose to claim itemized deductions instead of the standard deduction, you would use Schedule A to list your deductions. Your itemized total is then subtracted from your taxable income. 1040 Schedule A is an optional attachment to Form 1040. The goal of the schedule is to help walk taxpayers through allowable tax deductions to reduce their overall tax liability.

What Are Allowable Schedule A Itemized Deductions?

Here is a list of allowable Schedule A itemized deductions:

Medical and Dental Expenses

Please note, starting in 2019, medical and dental expenses will be limited to amounts over 10% of AGI.

Long-term care premiums

Long-term care premiums are calculated slightly differently than medical expenses are. Long-term care insurance premiums are tax-deductible to the extent that the premiums exceed 10% of an individual’s AGI. There is a deduction limit based on your age, and the insurance must be “qualified.

State and Local Taxes

The itemized deduction for all state and local taxes is $10,000. This will include your state and local income or sales, real estate, and personal property taxes. You can combine all of these taxes to claim a single deduction of up to $10,000.

Mortgage and Home Equity Loan Interest

Tax reform affects mortgage interest deduction amounts. For mortgages taken out after December 15, 2017, only interest on the first $750,000 of mortgage debt is deductible. For older mortgages, the $1 million limitation still applies. Additionally, interest on home equity loans, used for purposes other than substantial improvements to your home, will no longer be deductible.

Charitable Deductions

You can claim a deduction for qualified charitable contributions, up to 60% of your AGI; up from 50%. The Coronavirus Aid, Relief, and Economic Security (CARES) Act, signed into law on March 27, 2020, creates a new above-the-line deduction of up to $300 for charitable donations and relaxes limits on other charitable deductions to increase charitable giving during the COVID-19 pandemic. These include cash contributions and donations of food, and they apply both to individuals and corporations

Casualty and Theft Losses

Any casualty or theft loss incurred as a result of a federally declared disaster can be reported on Schedule A. Unfortunately, only losses in excess of 10% of the taxpayer’s AGI are deductible after subtracting $100 from the loss amount. If a taxpayer incurs a casualty loss in one year and deducts it on their taxes, any reimbursement that is received in later years must be counted as income. Taxpayers must complete Form 4864 and report the loss on Schedule A

Miscellaneous itemized deductions

You can no longer claim any miscellaneous itemized deductions, unless you fall into one of the qualified categories of employment claiming a deduction relating to unreimbursed employee expenses. Miscellaneous itemized deductions are those deductions that would have been subject to the 2%-of-adjusted-gross-income (AGI) limitation. You can still claim certain unreimbursed employee business expenses as itemized deductions on Schedule A (Form 1040)