Itemized Deduction
Quick Answer
Specific individual deductions claimed instead of the standard deduction to reduce taxable income.
Definition
Specific individual deductions claimed instead of the standard deduction to reduce taxable income.
Explanation
Taxpayers can itemize deductions (mortgage interest, state/local taxes up to $10,000, charitable donations, medical expenses) instead of taking the standard deduction. You itemize when total deductions exceed the standard deduction, which requires filing Schedule A.
Itemizing requires detailed record-keeping. The Tax Cuts and Jobs Act of 2017 significantly reduced the number of taxpayers who itemize by nearly doubling the standard deduction.
Example
Homeowner with $18,000 mortgage interest, $5,000 property tax, $3,000 charitable donations = $26,000 itemized deductions (better than $14,600 standard).
Frequently Asked Questions
What is Itemized Deduction?
Specific individual deductions claimed instead of the standard deduction to reduce taxable income.
How does Itemized Deduction work?
Taxpayers can itemize deductions (mortgage interest, state/local taxes up to $10,000, charitable donations, medical expenses) instead of taking the standard deduction. You itemize when total deductions exceed the standard deduction, which requires filing Schedule A.Itemizing requires detailed record-keeping. The Tax Cuts and Jobs Act of 2017 significantly reduced the number of taxpayers who itemize by nearly doubling the standard deduction.
Can you give an example of Itemized Deduction?
Homeowner with $18,000 mortgage interest, $5,000 property tax, $3,000 charitable donations = $26,000 itemized deductions (better than $14,600 standard).
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