To Itemize or not to itemize, that is the question.....

To itemize or not to itemize your deductions, that my friends is truly the tax question.  Regarding your deductions, you actually have two options.

The first option is to take the government's hand out that they call a standard deduction.  The standard deduction has different values depending on a couple of different factors.  You get the following standard deductions based on what your filing status is Single/Married filing separately $6300, Married Filing Jointly or Qualifying Widow(er) $12, 600, Head of Household $9,250.  If you or your husband/wife are blind or born before January 2, 1951, you get $1,650 for each box that you are able to check on line 39a.

The other option is to itemize your deductions.  In order to itemize your deductions, you need to fill out Schedule A.

Medical and Dental Expenses - In this section, you take the total Medical and Dental Expenses and put it on line 1.  One line 2 you put your adjusted gross income.  On line 3 you multiply line 2 by 10% unless you were born before January 2, 1951 in which case it is multiplied by 7.5%  You are going to subtract the two and put the difference (assuming line 3 is smalller) on line 4.  Line 4 is the amount of your Medical and Dental Expenses you are able to deduct.  Basically, it is the amount that you exceed 10% or 7.5% depending on your age.

Taxes You Paid - On line 5, you have the option of either deducting either state/local income tax deducted in 2015 or general sales tax paid in 2015.  We already went over line 6 and 7 in the home ownership blog.  Line 8 is basically any other deductible tax that is not listed on lines 5, 6 and 7.

Interest You Paid - Lines 10-13 were covered under the home ownership blog.  On line 14, you list any interest paid on money borrowed that is allocable to property held for investment.

Gifts to Charity - Gifts by cash or check go on line 16.  Line 17 will be any gifts that are non-cash/non-check.  Line 18 is simply anything that should have been claimed last year.

Casualty or theft losses - This is any loss by natural disaster or theft. You can deduct personal casualty or theft losses only to the extent that: The amount of each separate casualty or theft loss is more than $100, and The total amount of all losses during the year (reduced by the $100
limit discussed in (1)) is more than 10% of the amount of your adjusted gross income.

Job Expenses and certain miscellaneous deductions - Line 21 is unreimbursed employee expenses.  These need to be what is ordinary (not lavish) and necessary (in order to do your job).  What is necessary and ordinary will depend on what you do for a job.  Line 22 are tax preparation fees.  Line 23 are other expenses.  The instructions for schedule a details all of the different expenses that you could put one line 23.   Basically you enter the total amount you paid to produce or collect taxable income and manage or protect property held for earning income.  On line 24 you add them together.  Basically you can only deduct the amount that exceeds 2% of your adjusted gross income.  That amount will finally go on line 27.

Other Miscellaneous Deductions - There are only certain expenses that you can list on this line.  See the instructions for schedule a under line 28.  One example would be gambling losses.

You are able to deduct all of the expenses as long as your adjusted gross income is not greater than 154,950.  If it is, your deduction is limited.  You will have to refer to the instructions to determine the percentage of the total that you will be able to deduct.  At this point you add all of the deduction up and put the total on line 30.  This will transfer to Line 40 on the 1040.

Link to instructions Schedule A
Link to Schedule A
Link to Form 1040