Itemized Deductions

Added on 4/4/05

Some personal expenses are deductible on your income tax return.  In lieu of itemizing those expenses you may take a Standard Deduction.  For 2004 the Standard Deductions are:

Single, Head of Household or Married Filing Separately     $4,850
Married filing Jointly   9,700

 If the sum of your itemized deductions is less than the above, then itemizing will not save you taxes.

 WHAT CAN BE ITEMIZED:

  1. Medical Expenses that are more than 7.5% of your adjusted gross income.

  2. State & Local income taxes paid or (for 2004 & 2005) sales taxes paid.  If you use sales taxes paid you may use actual sales tax paid or the tax tables + any amount spent on the purchase of an auto, truck, boat or other items listed by the IRS.

  3. Real Estate taxes paid.

  4. Personal Property taxes paid (PA no longer has this tax).

  5. Other taxes based on income such as PA UC deduction, occupation taxes & OPT tax.  Per Capita taxes are not deductible.

  6. Interest paid on your home mortgage up to $1,000,000 of principal.

  7. Interest paid on debt secured by your home up to $100,000 of principal.

  8. Interest paid on money borrowed for investments up to the amount of investment income.

  9. Contributions to 501(c)(3) charities.

  10. Casualty losses not reimbursed by insurance in excess of 10% of adjusted gross income.

  11. Un-reimbursed employee business expenses and financial expenses in excess of 2% of adjusted gross income.

  12. Gambling losses up to the amount of any gambling winnings.

 

CONTRIBUTIONS: 

If you make a contribution of more than $250 at one time to one charity, the charity must give you a receipt for the contribution.  Save it for your records.

With the Tsunami victims, there is a bill that has passed the House, which will allow the deduction for contributions for this purpose made by January 1, 2005, to be deducted in 2004 or 2005.  When we prepare your 2004 return, if you made any contributions for Tsunami victims by 1/31/05, please check with us to see if the House Bill became law.

 CASUALTY LOSSES:

Since most PA counties were declared disaster areas after the September floods, anyone with a casualty loss from the September floods in one of those counties may deduct their loss in either 2003 or 2004.  If you had damage from the flooding in September, Please call our office for details.