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Schedule A, part of the Individual Tax Return Form or Form 1040, is a way for taxpayers to itemize deductions for the United States Internal Revenue Service (IRS). It is the easiest way to reduce the amount of taxes that are owed to the United States government, without taking a direct cut in pay. Schedule A works by allowing a taxpayer to subtract amounts spent on certain things, such as medical and dental care, charitable gifts, other taxes, and miscellaneous expenses, from his income; thereby, lowering the amount that may be paid to the government. The items and amounts that can be deducted by a taxpayer vary from year to year, according to the Internal Revenue Code.
The best way to receive Schedule A deductions is to keep records of various categories of expenses. Then, meet a certain income level, and finally file Schedule A deductions with the IRS according to the calculations specified on the Schedule A form itself. It may take a bit longer to fill out the tax forms when filing Schedule A deductions, especially since the long 1040 tax return form must be used; however, it could save a taxpayer money.
To determine whether a taxpayer qualifies for Schedule A deductions, he should go through the form line by line. Certain medical and dental expenses can be deducted, if they have not been reimbursed or paid by another person or party. These medical expenses include insurance premiums, prescription medicines, doctors and a wide range of other medical professionals, examination costs, tests, medical aids, some weight loss programs, and some programs to quit smoking – to name just a few.
The next two sections on Schedule A cover taxes and interest paid by the taxpayer. Some state and local taxes, including real estate taxes, can be part of the Schedule A deductions. However, most federal taxes cannot be deducted. Home mortgage interest can be deducted for an entire year at a time.
Charitable gifts are Schedule A deductions, as well. Charities that are religious, educational, literary, scientific in nature can receive deductible contributions. Contributions can be in the form of property, cash, or out-of-pocket expenses that occur while volunteering at a charity. Even driving to and from a charity and any tolls incurred can become a Schedule A deduction – as long as the expenses were not repaid.
All or part of a loss due to fire, storm, theft, vandalism, car accidents and boat accidents can be deducted under Schedule A, as well. Also, if money was lost due to an insolvent bank, it too can be deducted. As always, exceptions apply; so, it is always a good idea to check with a tax professional or tax attorney to verify whether an expense is indeed deductible.
Other miscellaneous deductions include educational expenses, such as the cost of books, tuition, lab fees, correspondence courses, and driving to and from certain educational activities. Check the IRS Code to find out the specifics. In some cases, alimony paid to a former spouse may be deducted, as well.
It may be overwhelming to figure out exactly whether an expense is deductible; however, with the proper advice from a seasoned accountant, attorney or tax specialist, most questions can be answered easily. If in doubt, err on the side of caution. Schedule A deductions are designed to help taxpayers pay less money to the government; but, no one wants to face a tax audit over a questionable deduction.
@miriam98 - I do the same. I recommend that you plan in advance if you anticipate using the 1040 Schedule A. I usually begin getting ready for next year’s tax return at around May of the current year, right after I’ve finished filing my taxes for the past year. I begin gathering records such as medical bills, etc. so that I can have them handy for next year without too much hassle—and more importantly, be ready in case of an audit.
I don’t worry about charitable contributions because I get a statement at the end of the year with my total contributions. Prepare in advance, and you can get every deduction you deserve.
I almost always use 1040 Schedule A itemized deductions. I will deduct things like charitable contributions, medical expenses and my mortgage interest for the entire year.
The combination of all of these items puts me over the threshold for the standard deduction, and so my tax software uses my itemized deductions to figure my tax.
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