Topic 501 - Should I Itemize?

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 and filing a separate return, and your spouse itemizes deductions
• You are a nonresident alien or a dual-status alien during the year, or
• You are filing a tax return for a period of less than 12 months because of a change in your annual accounting method

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 Schedule A if you:

• Cannot use the standard deduction
• Had large uninsured medical and dental expenses
• Paid interest or taxes on your home
• Had large unreimbursed employee business expenses
• Had large uninsured casualty or theft losses, or
• Made large charitable contributions

You may be subject to limitations on some of your itemized deductions. Please refer to the Form 1040 Instructions or Form 1040, Schedule A Instructions for the limitation amounts.Note: For 2011, taxpayers with adjusted gross income above a certain amount will no longer lose part of their itemized deductions.

For more information on the difference between itemized deductions and the standard deduction, refer to the Form 1040 Instructions, or Publication 17, Your Federal Income Tax. You may also refer to Topic 551 and Publication 501.