Itemizing Your Deductions

Filed Under: Taxes, Tax Deduction
If the amount of your allowable deductions is greater than your standard deduction, the IRS encourages you to itemize your deductions.

If you don't qualify for the standard deduction, you have no choice but to itemize. Itemizing your deductions requires you to complete Schedule A of IRS Form 1040.

Your itemized deductions begin to phase out at higher incomes. This rule for losing your itemized deductions is sometimes referred to as the "phase out" rule.

For 2006, you begin to lose some of your itemized deductions when adjusted gross income (AGI) reaches $150,500. (For married taxpayers filing a separate return, the income phase out amount is $75,250.)

Your itemized deductions phase out at the rate of 3% of additional income. In other words, for each $1,000 of adjusted gross income above the phase out limits, you lose $30 of itemized deductions. You can never lose more than 80% of your itemized deductions.

To calculate your itemized deductions, see the instructions to Form 1040.

Some major categories for itemizing deductions include:

Home mortgage interest expense. You may generally deduct the mortgage interest you pay on your residential mortgage for up to $1 million in home-acquisition debt and $100,000 in home equity debt. See IRS Pub. 936 for more information.

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Real estate taxes. Property taxes that you pay on your home may also be itemized. See IRS Pub. 530 for more information.

Medical and dental expenses. You may deduct qualified medical and dental expenses that exceed 7.5% of your adjusted gross income. See IRS Pub. 502 for more information.

Contributions to charitable organizations. The IRS allows you to deduct contributions of money or property to a qualified organization for its use. See IRS Pub. 526 for more information on the types of qualified organizations and charitable contributions.

Miscellaneous expenses. Miscellaneous expenses are generally unreimbursed expenses that are related to your performance of a job such as travel, lodging and meals. Certain types of miscellaneous expenses can only be deducted for amounts that exceed 2% of your adjusted gross income. See IRS Pub. 529 for more information.

The Economic Growth and Tax Relief Reconciliation Act of 2001 gradually eliminates the phase out rule over five years, beginning in 2006.

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Recent Comments

1 - 10 of 13
13 comments

Franca916 11:10:19 AM Apr 13 2008

The banks charge usurous rates of interest, yet we cannot deduct one penny of this interest on our credit cards.

FM, NY

Wguswall 07:47:49 PM Apr 08 2008

IRS is now aggressive and auditing at a higher per centage .It seems every family I know has one member who has been audited or billed .This country now penalises those who work hard and try to earn extra-the IRS has contirbuted to this trend

Psb22 11:14:03 PM Apr 04 2008

I was Reagan who eliminated the credit for interest on credit card payments, as well as eliminating many deductions for work related travel, food and entertainment expenses.
The GOP has always favored the rich at the expense of the middle class...

BEARDBurnet 10:43:06 PM Mar 05 2008

THANK THE DEMOCRATS FOR THE TAX ON YOUR SS!

Ergo7Rick 08:31:02 PM Feb 28 2008

The Congress should abolish this byzantine tax code, the abusive IRS, and all wage taxes (as wages are just a trade, no profit made, of your skills, abilities and knowledge for money). I think it is an abomination having to sort throught ridiculous codes and forms, I have better things to do with my time.... and I should not have to pay somebody to do my taxes. Fair Tax is the only way to get rid of all this junk, get the government out of your paycheck and your private life. Vote OUT all incumbents that refuse to abolish the immoral wage taxes!

UserJasmine505 01:56:25 PM Feb 27 2008

Anyone here remember when interest on credit cards was tax deductible?? I DO! Ever since this deduction was removed, the interest rates on these cards has sky rocketed to 30% or more. I think we would see some LONG OVERDO government regulation on credit card interest rates if they were once again tax deductible!!

Kbtty309 10:17:50 PM Feb 25 2008

If the Goverment can give us another tax rebate in May or?, why do they charge us so much the first time around.Sometimes I think we should have a civil war, and throw this whole Goverment out and start over, with a Goverment for the People, by the common working people!!!!!!

Bobbpat 05:28:17 PM Feb 25 2008

Need copy of schedule A to go with Form 1040 for itemizing deductions. Keep getting form 1040 A --- need just schedule A. Please send to Bobbpat@aol.com

HKhosrofian1 02:51:39 AM Feb 14 2008

I don't know what I will do if I get the rebates but I will use the proceeds to fix up the mess that is comming in from my mail box (junk mostly) and my computer which has lost it's mind if it ever had one. As far as I am concerned the whole thing of communicating via of computer is a complete botched up mess.
I am sure or at least I hope the president gets the message that the average American is very confused when he or she is only trying to communicate and there time too opten when the whole thing gets into funny land of magic and no answers other than more confusion. Some how I think that logic should be the rule of the day but all the messages seem to point that funny land will win this war and the funny people will finally be in charge.
Oh my God, I only hope logic whatever you call that will finally visit out planet. The lack of common sense and logic is out of style now days and things will get even worst until logic is replaced by this magic land of foolery and dreams. But

Curtisssb2 10:13:23 PM Feb 13 2008

blah blah blahhhhhhh......;)....

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