itemized deductions under us tax laws

Itemized deductions are allowed to individual taxpayers on their federal income tax returns that decrease their taxable income,

When Itemized Deduction is Better Than Standard Deduction ?

itemized deductionsThere are two ways an Individual can claim deductions under Internal Revenue Code while filing tax return- either by claiming standard deduction or the intemized deduction. If you can claim standard deduction or itemized deduction , itemized deduction option ( on schedule A of Form 1040 ) will logically be better if it gives you more deduction than the standard deduction .

Major itemized  deduction are :

Under itemized deductions, a tax payer can deduct

  1. his/her medical and dental expenses
  2. unreimbursed employee business expenses,
  3. certain payments of taxes,
  4. interest,
  5. contributions to charities ,
  6. miscellaneous expenses.
  7. certain casualty and theft losses

As you know the maximum itemized deduction is fixed and also based on your adjusted gross income , itemized deduction may  be reduced or phased out if the adjusted gross income is more than the following threshold ( For tax year  2016 )

  • Single – $259,400
  • Married filing jointly or qualifying widow(er) – $311,300
  • Married filing separately – $155,650
  • Head of household – $285,350

But there are cases, when the option for standard deductions are not available !Read More »When Itemized Deduction is Better Than Standard Deduction ?