Itemized Deductions from A to Z, Part 1: The Basics

For additional information regarding 2014 tax planning, you can download our 2014 Tax Planning Guide from the Resources tab on our website.


All qualifying taxpayers are allowed a standard deduction regardless of actual deductions. For those under 65 years of age, the basic standard deduction for 2014 is $12,400 if married and filing jointly ($6,200, single). So, if your actual deductions total $10,100 (married, filing jointly) the higher standard deduction of $12,400 is taken. It’s that easy—no supporting documentation or information is required.

An additional standard deduction is available to people over age 65 or for those who are blind. For someone single and over 65, an additional $1,550 brings the total standard deduction to $7,750. Married taxpayers get an additional $1,200 for each spouse over 65 bringing the potential maximum standard deduction to $14,800.

Beginning with 2014, itemized deductions are subject to a reduction if your adjusted gross income (AGI) exceeds $305,050 (married, filing jointly) or $254,200 if single. The reduction is 3% of the amount your income exceeds the threshold, so if your income is $400,000 ($94,950 over the married threshold) allowable itemized deductions are reduced by $2,849 (3% of $94,950). Some deductions— such as gambling losses, medical expenses, investment interest and casualty losses—are not subject to the above reduction.

Know that this information is by no means all-inclusive, but rather, it’s meant to offer a basic understanding of common situations and deductions. Before making a decision on an issue involving significant dollars, you should thoroughly research your numbers or get professional tax help.

Planning Tip:
Before year-end, estimate your income and expenses. If your income is going to be unusually high, it might be better to delay paying additional itemized deductions that might be subject to the phase-out rules if you expect your income to drop in the next year. Postponing additional deductible payments might also be a good idea if you are going to fall below the standard deduction and making a payment next year will allow you to itemize. Additionally, you always need to be mindful of the effect of the alternative minimum tax (AMT). If you think you will pay AMT, then you lose the benefit of your state and local tax payments on your federal return. Therefore, there will be no tax benefit to making additional state or local estimated tax payments before year-end.

In our next post, we’ll cover medical deductions.