There 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
- his/her medical and dental expenses
- unreimbursed employee business expenses,
- certain payments of taxes,
- contributions to charities ,
- miscellaneous expenses.
- 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 ?