As a tax professional with extensive experience in personal finance and tax planning, I often help individuals understand the complexities of the U.S. tax code. One of the key areas of focus is the concept of itemized deductions, which can significantly impact a taxpayer's overall tax liability. Itemized deductions are a series of expenses that taxpayers can list on their tax returns to reduce their taxable income. These deductions are claimed instead of taking the standard deduction, which is a fixed amount that varies based on the taxpayer's filing status. To qualify for itemized deductions, the total amount of these expenses must exceed the standard deduction for the taxpayer's filing status. Here's a breakdown of some common categories of itemized deductions: 1. Medical and Dental Expenses: These include out-of-pocket costs for medical care, such as doctor visits, prescriptions, and even some types of medical equipment. The IRS typically allows taxpayers to deduct expenses that exceed 7.5% of their adjusted gross income (AGI). 2. State and Local Taxes: Payments made to state and local governments for income, property, and certain sales taxes can be deducted. However, there is a limit on the total amount that can be deducted for state and local taxes, known as the SALT cap. 3. Interest on Certain Debts: Homeowners can deduct interest paid on mortgages used to buy, build, or improve their primary or secondary residence. Investment interest may also be deductible, but it is subject to certain conditions. 4. Charitable Contributions: Donations to qualified charitable organizations can be deducted. The IRS has specific rules about how much can be deducted and the types of organizations that qualify. 5. Casualty and Theft Losses: If a taxpayer experiences a loss due to a federally declared disaster, they may be able to deduct part of that loss. 6. **Job Expenses and Certain Miscellaneous Deductions**: These include unreimbursed employee expenses that are necessary for the taxpayer's work, subject to certain limitations. 7. Gambling Losses: These can be deducted, but only to the extent of the taxpayer's gambling winnings. 8. **Casualty Losses for Personal Use Property**: If a taxpayer's personal property is damaged, destroyed, or stolen in an event that is not covered by insurance, they may be able to deduct the loss. 9. Gifts to Political Organizations: While not tax-deductible, contributions to political organizations are considered itemized deductions. 10. Certain Investment Expenses: Taxpayers can deduct certain investment-related expenses, such as fees paid to brokers or investment advisors. It's important to note that the Tax Cuts and Jobs Act of 2017 made significant changes to itemized deductions, including the introduction of the SALT cap and the suspension of miscellaneous deductions subject to the 2% floor. When deciding whether to itemize deductions or take the standard deduction, taxpayers should consider their unique financial situation. It's often helpful to consult with a tax advisor to ensure that they are making the most of the deductions available to them. read more >>

Under United States tax law, itemized deductions are eligible expenses that individual taxpayers can claim on federal income tax returns and which decrease their taxable income, and is claimable in place of a standard deduction, if available.read more >>