What Is an Itemized Deduction US

To itemize your deductions, you must first list your deductible expenses, add up all of them, and file the total on your tax return.

The total amount of the itemized deductions is subtracted from AGI to determine the final taxable income. If you choose to itemize your deductions on your tax return, you should carefully document the qualifying expenses you paid during the year.


Keep all receipts and other documentation to justify these expenses if the IRS requires them. Bank statements, checks, property tax bills, insurance policies, medical bills, thank you letters for charitable gifts, etc., are all documents that can serve as supporting documents.

In general, you are eligible to claim the following categories of personal deductions: medical and dental expenses, state and local taxes, real estate and personal property taxes, mortgage interest on homes less than $750,000, charitable contributions, losses caused by events accident or theft medical and dental insurance premiums are considered part of medical and dental costs, as long as your health insurance plan does not cover those premiums.

Other medical and dental treatments are deductible if they qualify for reimbursable expenses.

For 2021 taxes, you can deduct over 7.5% of your adjusted gross income.

For example, if your adjusted gross income is $55,000 and you incur $7,000 in qualified medical expenses, you can only deduct $3,375 of those expenses because that amount exceeds $4,125, which is your AGI. Local Equals 7.5% on state and property TaxesTCJA limits the deduction for state, local, and property taxes to $10,000, or $5,000 if the taxpayer is married but files a separate tax return.$10,000 in total, not $10,000 in taxes of any kind. If you're married but filing separately, the limit is $375,000.

If you incurred debt that now pays interest before December 16, 2017, the limits increase to $1 million and $500,000, respectively. This deduction applies only to acquired debt, not to past equity debt.


The only exception to this rule, as stated by the IRS, is when equity loan funds are used to "purchase, build, or substantially improve" a home.

This limit was imposed by the Tax Cuts and Jobs Act (TCJA). Charitable Giving Most taxpayers can deduct charitable donations up to 60% of their adjusted gross income (AGI), although certain types of gifts are still subject to the 20%, 30%, and 50% limits.

How does the single deduction work? You can choose the standard deduction or list your annual expenses on your tax return.

You can choose any of them. If you break them down, you can calculate the total amount of eligible expenses. You can minimize the income needed to pay federal income taxes by taking the standard deduction and the sum of itemized deductions.

You can claim the standard deduction or line up the specific deductions you can claim, but you cannot claim both.

The only sensible option is to minimize your taxable income. A more straightforward method is the standard deduction, a predetermined amount based on your tax status.

When the Tax Cuts and Jobs Act went into effect in 2018, the standard deduction amount quadrupled (more or less on returns filed in 2022).

This amount increases to $25,100 if you are married and filing with your spouse or an eligible widow or widower with dependent children.

If you are an eligible head of household, the amount is $18,800. Most taxpayers took advantage of the standard deduction before the Tax Cuts and Jobs Act (TCJA).

The TCJA made various changes to several individual deductions, including limiting them to specific previously unrestricted amounts. Other personal beliefs have been completely removed from the equation.

As a result of the legislation, the percentage of taxpayers detailing deductions fell from 31.1% to 13.7% in 2019.