Tax Form 1040 Schedule A is the schedule that allows you to take an itemized deduction, rather than the standard deduction for the year. The schedule walks you through possible deductions you can take on your taxes. If you take the standard deduction, you don’t have to worry about Form 1040 Schedule A.
Deductions lower your tax liability by reducing the amount of income against which you pay federal income tax. If you have enough of them, they can add up to save you more money than you'd save by taking the standard deduction.
These are the standard deductions for 2021 and 2022:
|Filing Status||2021 tax year||2022 tax year|
|Married, Filing Jointly||$25,100||$25,900|
|Married, Filing Separately||$12,550||$12,950|
|Head of Household||$18,800||$19,400|
Each deduction lowers your tax bill by the amount of the deduction multiplied by your marginal tax rate. As you can see, the more allowable deductions you can take, the better.
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Completing the Form
That makes Schedule A one of the most important forms you’ll fill out in a tax year. Below is a look at all of the information you’ll want handy when it comes time to fill out Schedule A.
- Medical and dental expense records - You can deduct any medical expenses exceeding 7.5% of your Adjusted Gross Income. This includes most procedures, prescriptions, and premiums. You can also deduct money you paid for Personal Protective Equipment, such as masks, hand sanitizer, and sanitizing wipes. Bills from providers and insurers will help you fill out your schedule A.
- Taxes paid - You can deduct several taxes from your income for federal tax purposes, including state and local income or general sales taxes paid, real estate taxes, property taxes, new motor vehicle taxes, and others. You’ll want records of all these taxes.
- Interest paid - You’ll want Form 1098 (provided by your bank) as a record of any mortgage interest paid during the year. You’re also allowed to deduct certain qualified mortgage insurance premiums, and you’ll want a record of that also.
- Gifts to charity - Donations to a federally recognized non-profit organization are tax-free. You’ll want receipts from the organization to document your donation.
- Casualty and Theft Losses - If you were the victim of losses due to theft or casualty, these losses are deductible but only if they were caused by a federally declared disaster. You’ll need to fill out Form 4684 and then report that amount on Form 1040, Schedule A.
- Miscellaneous deductions - Most of these were discontinued in 2018. You can still deduct unreimbursed employment expenses, but only if you fall into one of the following categories:
- Armed forces reservists
- Qualified performing artists
- Fee-basis state and local government officials
- Employees with impairment-related work expenses
That, in a nutshell, is the collection of documents you’ll want to have ready when it comes time to fill out your Schedule A. However, don’t start collecting them the day before taxes are due!
Many organizations will furnish you with relevant tax forms at the end of the year. For instance, your mortgage carrier will provide you with Form 1098. But you'll want to keep track of other expenses, like medical bills and charitable gifts, throughout the year.
During the year, you’ll also want to remember these allowable deductions when making financial decisions. If you’re thinking about donating to charity, for instance, consider that when you donate a dollar, you’ll really only pay between 67 and 85 cents when you itemize your taxes.
You can never get back all your money by deducting an expense when you itemize your taxes. But understanding your deductions will help you plan. And the best-laid plans usually offer the best results.
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