Generally, you must decide whether to itemize deductions or to use the standard deduction. The standard deduction is a dollar amount that reduces the amount of income on which you are taxed. You should itemize deductions if your allowable itemized deductions are greater than your standard deduction. Some taxpayers must itemize deductions because they cannot use the standard deduction.
You cannot use the standard deduction if:
- You are married filing as married filing separately, and your spouse itemizes deductions,
- You are filing a tax return for a period of less than 12 months because of a change in your annual accounting method, or
- You are a nonresident alien or a dual-status alien during the year. (If you are a nonresident alien who is married to a U.S. citizen or resident at the end of the year, you can choose to be treated as a U.S. resident. If you make this choice, you can take the standard deduction. For additional information, refer to Publication 519, U.S. Tax Guide for Aliens).
In addition, an estate or trust, common trust fund, or partnership cannot use the standard deduction. For additional information, refer to Publication 501, Exemptions, Standard Deduction, and Filing Information.
You may benefit from itemizing your deductions on Form 1040, Schedule A (PDF) if you:
- You do not qualify for the standard deduction, or the amount of the standard deduction is limited
- You have large, uninsured medical and dental expenses
- You pay interest and taxes on a home or personal property
- You have large, unreimbursed employee business expenses
- You have large, uninsured casualty or theft losses
- You make large contributions to qualified charities
- Most deductions are subject to the 2% of adjusted gross income (AGI) rule. This means the sum of expenditures greater than 2% of your total AGI is deductible in the amount that exceeds the 2%.
If you’re under 65, medical and dental expenses that are greater than 10% of your total AGI are deductible in the amount that exceeds the 10%. If either you or your spouse is 65 or older, you can deduct the amount that exceeds 7.5% of your AGI.
You may be subject to limitations on some of your itemized deductions. Please refer to the Form 1040 Instructions (PDF) or Form 1040, Schedule A Instructions (PDF) for the limitation amounts. In addition to these limits, beginning in 2013, your total itemized deductions may be phased out (reduced) if your adjusted gross income exceeds the following threshold amounts for your filing status:
- Single – $250,000
- Married filing jointly or qualifying widow(er) – $300,000
- Married filing separately – $150,000
- Head of household – $275,000
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