Itemized deduction

An itemized deduction is a reduction of a taxpayer's adjusted gross income, and is taken instead of a standard deduction. This deduction is based on certain kinds of expenditures made by the taxpayer during the tax year. A number of itemized tax deductions are allowed under the tax code, including the following:

  • Business use of the home or automobile
  • Casualty losses
  • Contributions
  • Income taxes, state and local
  • Medical expenses
  • Mortgage interest
  • Real estate taxes
  • Work-related education expenses

In order to take advantage of itemized deductions, a taxpayer must keep adequate records of these expenditures, typically including supplier receipts.

Itemized deductions are limited based on the amount of adjusted gross income reported by a taxpayer. Some of these deductions can only be used once they exceed a certain threshold amount, so that modest expenditures may not result in an itemized deduction.

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Family Tax Planning