Whether or not one should itemize their deductions is a question of whether or not their allowable itemized deductions exceed the standard deduction for the year. We've included a list of the most common itemized expenses to consider.
Allowable itemized deductions
Medical and dental expenses
- Medical and dental expenses are only deductible to the extent they exceed 7.5% (10% beginning the 2019 tax year) of your adjusted gross income, as a result, most individuals never reach the threshold necessary to benefit from these expenses.
- Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. Medical care expenses must be primarily to alleviate or prevent a physical or mental disability or illness. They don't include expenses that are merely beneficial to general health, such as vitamins or a vacation.
Taxes you paid
- For 2018 through 2025, you may itemize the following taxes:
- State and local property taxes,
- State and local personal property taxes, and
- The greater of income taxes or sales taxes paid to a state, city or county.
- If these taxes are deducted, any future refunds from these jurisdictions should be included in income.
- The Tax Cuts and Jobs Act imposed a $10,000 annual limit on the state and local tax deduction for all taxpayers. As a result of this cap, $10,000 is the most you can expect to itemize for taxes.
Interest you paid
- Taxpayers with a mortgage or home equity loan should always check to see if itemizing this deduction on their tax return yields a greater deduction than the standard deduction.
- Mortgage lenders should provide Form 1098 by the end of January which reports the amount of mortgage interest paid during the previous year.
Gifts to charity
- Not all contributions to a non-profit organization qualifies for the charitable deduction. Because the IRS allows deductible donations to some entities that aren't registered as a 501(c)(3), donors can get confused.
- Its best to ask upfront. The date the transfer of funds goes through to a charitable organization is the year the funds are tax deductible.A promise to pay or a future dated check does not create a deductible event.
- Charitable contributions represent gifts given without reciprocity. If something is received in return, for example, tickets to an event or purchase of an item, the definition of a charitable contribution is not met.
- Political contributions do not count as charitable donations.
- If there is no substantiation for your charitable contribution, it is not deductible.
Casualty and theft losses
- Generally, you may deduct casualty and theft losses relating to your home, household items, and vehicles on your federal income tax return. You may not deduct casualty and theft losses covered by insurance, unless you file a timely claim for reimbursement and you reduce the loss by the amount of any reimbursement or expected reimbursement.
- If your property is personal-use property or isn't completely destroyed, the amount of your casualty loss is the lesser of:
- The adjusted basis of your property, or
- The decrease in fair market value of your property as a result of the casualty.
- If your property is business or income-producing property, such as rental property, and is completely destroyed, then the amount of your loss is your adjusted basis.
- The amount of your theft loss is generally the adjusted basis of your property because the fair market value of your property immediately after the theft is considered to be zero.
Job expenses and certain miscellaneous deductions
- Miscellaneous deductions subject to the 2% limit (only the total amount exceeding 2% of AGI may be deducted) include:
- Unreimbursed employee expenses - examples include:
- Union or professional organization fees related to your employment
- Subscriptions related to work
- Business liability insurance premiums
- Work uniforms (as long as they are used exclusively for work and do not classify as casual attire)
- Tax preparation fees - you may deduct tax prep fees for the year you paid them
- Other expenses - includes expenses incurred to support income producing activities
Other miscellaneous deductions
- Other miscellaneous deductions not subject to the 2% limit are as follows:
- Amortizable bond premium
- Gambling losses
- Federal Estate Tax on Income in Respect of a Decedent