Itemized Deductions and Federal Income Tax

Many of those who file federal income tax with the Internal Revenue Service (IRS) find that having itemized deductions can be a great way to pay less federal income tax.  Although the Internal Revenue Service offers a standard deduction on federal income tax that varies depending on if you are filing as an individual, Head of Household, or Married Filing Jointly or Separately, itemized deductions can typically exceed the standard deduction.

So what are considered itemized deductions?  Following is a list of the most common itemized deductions allowed by the Internal Revenue Service.

Business Expenses.  Business expenses that are not reimbursed are fully deductible.  Business expenses include travel and entertainment expenses, as well as those related to business use of your home or automobile.

Casualty Losses.  Losses as the result of a disaster, theft, or other casualty that are not reimbursed by insurance are fully deductible as an itemized deductions.

Charitable Contributions.  Amounts given to a charity are fully an itemized deduction.  For cash, property, or services that are given away to be considered a deductible charitable contribution, the cash, property, or service must be given to a qualified organization as defined by the Internal Revenue Service.

Educational Expenses.  Expenses related to your education in order to maintain or improve your job skills as required by your employer or law that are not reimbursed by your employer are fully deductible on your federal income tax.

Interest Expenses.  Interest paid on certain types of debt are fully deductible as an itemized deduction on your federal income tax.  For interest to be deductible, it must related to an investment or a qualified residence.

Medical Expenses.  For years up to and including December 31, 2012, medical expenses may be deducted to the amount that they exceed 7.5% of your adjusted gross income.  Beginning January 1, 2013, medical expenses can only be deducted in the amount they exceed 10% of your adjusted gross income.

Taxes.  The following types of taxes are fully deductible as an itemized deduction: state, local, and foreign income and real estate taxes; state and local property taxes; state and local sales taxes; and motor vehicle taxes.

Miscellaneous Expenses.  Certain other expenses are deductible as an itemized deduction to the extent they exceed 2% of your adjusted gross income.  These miscellaneous expenses include unreimbursed employee expenses and fees paid related to the preparation of your federal income tax.

As noted above, this is only a list of the most common itemized deductions allowed by the Internal Revenue Service.  You should seek the help of a tax attorney for a complete list of itemized deductions.

If you are unsure if you have sufficient itemized deductions in order to claim them on your federal income tax, you should seek the help of a tax attorney.  A tax attorney will know the current tax laws and how to review your specific income, expenses, and overall situation to determine what your itemized deductions are and if they are sufficient for you to claim them on your federal income tax.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.