There are two ways you can take deductions on your federal income tax return: you can itemize deductions or use the standard deduction. Deductions reduce the amount of your taxable income.
The standard deduction amount varies depending on your income, age, whether or not you are blind, and filing status and changes each year; see How Much Is My Standard Deduction? and Topic No. 551 for more information.
Certain taxpayers can't use the standard deduction:
- A married individual filing as married filing separately whose spouse itemizes deductions.
- An individual who files a tax return for a period of less than 12 months because of a change in his or her annual accounting period.
- An individual who was a nonresident alien or a dual-status alien during the year. However, nonresident aliens who are married to a U.S. citizen or resident alien at the end of the year and who choose to be treated as U.S. residents for tax purposes can take the standard deduction. For additional information, refer to Publication 519, U.S. Tax Guide for Aliens.
- An estate or trust, common trust fund, or partnership; see Code Section 63(c)(6)(D).
You should itemize deductions if your allowable itemized deductions are greater than your standard deduction or if you must itemize deductions because you can't use the standard deduction.
You may be able to reduce your tax by itemizing deductions on Form 1040, Schedule A, Itemized Deductions (PDF). Itemized deductions include amounts you paid for state and local income or sales taxes, real estate taxes, personal property taxes, mortgage interest, and disaster losses from a Federally declared disaster. You may also include gifts to charity and part of the amount you paid for medical and dental expenses. You would usually benefit by itemizing on Form 1040, Schedule A (PDF), if you:
- Can't use the standard deduction or the amount you can claim is limited
- Had large uninsured medical and dental expenses
- Paid interest or taxes on your home
- Had large "other" deductions (line 16 on Form 1040, Schedule A)
- Had large uninsured casualty or theft losses from a Federally declared disaster, or
- Made large contributions to qualified charities
Individual itemized deductions may be limited. See the Form 1040, Schedule A Instructions (PDF) to determine what limitations may apply. For more information on the difference between itemized deductions and the standard deduction, refer to Publication 17, Your Federal Income Tax for Individuals or the Form 1040 Instructions (PDF). You may also refer to Topic No. 551 and Publication 501, Dependents, Standard Deduction, and Filing Information.