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Typical Itemized Deductions

Below is a list of typical itemized deductions that many taxpayers can claim on their federal income tax return as well as the rules on how taxpayers can claim these typical itemized deductions.

Medical Expenses
  • Any qualified medical expenses in excess of 7.5% of the taxpayer's AGI
Taxes Paid

For qualified & deductible taxes paid, the taxpayer can deduct:

  • EITHER state and local income taxes OR general sales taxes (can use the sales tax table)
  • Real estate tax based on assessed value of the property (Form 1098)
  • Personal property tax
Mortgage Interest and Points

If the taxpayer is legally liable for the debt, the taxpayer can deduct interest and points paid in the year paid or accrued. Usually points paid to refinance are not tax deductible in full but prorated over the life of the loan.

Charitable contributions

Donations to qualified charitable organizations can be deducted based on the fair market value. If donating noncash contributions, they have to be in good condition. If the value of a single noncash contribution exceeds $500, they have to be appraised properly. (Form 8283) Cash contributions are tax deductible if good records are kept.

Donation of autos, boats and planes

For donations of value exceeding $500, the tax deduction amount is the gross sales proceeds if the charity sells the donated item or the estimate fair market value if the charity does not sell the donated item.

Personal Casualty and Theft Losses
  • progressive deterioration of property does not qualify
  • the amount of loss is the smaller of:
    • adjusted basis before the casualty or theft (e.g. improvements, depreciation), or
    • FMV before the casualty or theft - FMV after
    • Then MINUS any insurance or other reimbursements received or expected to receive.
  • Cost of cleanup or repairs can be included if to bring property value up to pre-casualty or theft condition
  • Insurance claim must be file (if covered)
  • Deduction only in the year theft is discovered or casualty loss occurred (even if not repair in the same year)
  • Loss in a Presidentially declared disaster area can be deducted in the year of occurrence or the year before.

Deduction limit (deductible loss) for personal casualty and theft losses:

  • Each loss caused by a single event reduced by $100
  • Total of the losses (after $100 reduction / event) reduced by 10% AGI.
Employee expenses and Misc Expenses

Employee expenses and miscellaneous expenses can only be deducted if they exceed 2% of AGI.

  • Qualified meals are usually 50% deductible.
  • Gambling losses and gambling winnings are not subject to the 2% AGI rule.
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