How to Calculate Itemized Deductions
- 1). Calculate your adjusted gross income. This is your total income, including wages, self-employment income and retirement distributions, minus any allowable deductions, such as college tuition and fees, retirement contributions and money paid to a health savings account. Calculate this figure in lines 7 through 37 of the IRS Form 1040, and use the result to base your itemized deductions.
- 2). Review Schedule A of IRS Form 1040. On this form, you will find categories of allowable itemized deductions. These include medical and dental expenses, real estate taxes you paid, interest you paid, charitable contributions, casualty and theft losses, job expenses and miscellaneous expenses. Note that there are limitations and requirements to each category of deduction. For example, all interest you paid will not be tax deductible, only certain types of interest, such as home mortgage interest.
- 3). Review the instructions for Schedule A of IRS Form 1040. In this booklet, you will find in-depth information on what qualifies as an itemized deduction and what does not. For example, medical and dental expenses are only deductible to the extent that they exceed 7.5 percent of your adjusted gross income. Therefore, if your expenses do not exceed this amount, you will not be able to take the deduction.
- 4). Total your allowable itemized deductions. On Schedule A of Form 1040, total each category of itemized deduction in the appropriate section. Note the limits to medical and dental expenses, job expenses and certain miscellaneous expenses. Be sure to calculate the allowed percentage in accordance to your adjusted gross income.
- 5). Enter your allowable itemized deductions on Form 1040. If your income exceeds $166,800, or $83,400 for individuals who are married and filing separately, there may be limitations to your allowable itemized deductions. If this is the case, review page A11 for your allowable deduction. If your adjusted gross income is within the allowable range, enter your total itemized deductions accordingly.