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Itemizing Basics ... Your Schedule A

Itemizing is an easy concept to understand, but the strategies behind it can be a bit complex.

The main rule of thumb is this:  itemize only if the total of your itemized deductions is greater than your standard deduction. Your tax is based on your “taxable income.”  That's your total income after you've subtracted of your deductions like your IRA contributions, or alimony payments, plus your personal exemption and either your standard deduction or your itemized deductions. The more you can deduct, the less in tax you have to pay.

There are five main categories of itemized expenses that you can deduct on your taxes:

(1) Medical and dental expenses.

(2) Taxes. These include state and local income taxes, property taxes on real estate, intangible taxes and on personal property taxes on such things as cars.

(3) Interest expenses. For most people, these are limited to home mortgage interest, points (interest that’s prepaid to buy a home), and some interest on investments and education expenses. For most taxpayers, the mortgage deduction is what lets them itemize.

(4) Charitable contributions, including donations to the Goodwill or to a church.

(5) Casualty and theft losses. The key, then, is to maximize the value of your itemized deductions. Some itemized deductions, including g medical expenses are not allowed until they exceed a certain ‘floor’ amount. So planning can put dollars in your pocket. Many of these deductions can be either accelerated or deferred. Discuss this in detail with your tax advisor to ensure that you get all the deductions you are entitled to.

These articles are in intended to be general guidelines and information to the public.  Be sure to consult with your tax professional regarding your specific situation.