Itemized deductions are the specific personal expenses Congress allows on Schedule A in place of the standard deduction: state and local taxes (capped), home mortgage interest on up to $750,000 of acquisition debt, charitable contributions, medical expenses above 7.5% of adjusted gross income, and casualty losses in federally declared disasters. A taxpayer itemizes only when the total beats the standard deduction, which after the standard deduction roughly doubled in 2018 is usually driven by a large mortgage, big charitable gifts, or the raised SALT cap. Itemizing is entirely separate from business writeoffs: rent, software, payroll, and other business costs are deducted on the business schedule or entity return and never touch Schedule A. High earners should also watch phase-downs and floors that trim itemized benefits, and remember that the alternative minimum tax can claw back some of the value.
Itemized Deductions
Primary authority: IRC §63(d); Schedule A (Form 1040)
The authority behind it
IRC §63(d); Schedule A (Form 1040)
Every entry in this glossary cites the statute, regulation, or IRS guidance behind it.
Worked example
A homeowner pays $24,000 of mortgage interest, $10,000 of state taxes, and gives $8,000 to charity, totaling $42,000. Itemizing beats the $31,500 joint standard deduction by $10,500, saving about $3,700 at a 35% marginal rate.
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