Form 1040 Schedule A: Itemized Deductions (2012)
What Form 1040 Schedule A Is For
Schedule A (Form 1040) is the form you use to claim itemized deductions when filing your 2012 federal income tax return. Think of it as a detailed list of specific expenses the IRS allows you to subtract from your income, potentially lowering the amount of tax you owe. The basic decision every taxpayer faces is whether to take the standard deduction (a fixed dollar amount based on your filing status) or to itemize deductions on Schedule A. You should choose whichever option gives you the larger deduction, as this will result in less tax.
For 2012, the standard deductions were $5,950 for single filers, $11,900 for married filing jointly, $8,700 for head of household, and $5,950 for married filing separately. If your itemized deductions add up to more than your standard deduction, Schedule A is the right choice for you.
Schedule A allows you to deduct seven main categories of expenses: medical and dental expenses that exceed 7.5% of your adjusted gross income; state and local taxes (either income taxes or general sales taxes, but not both); real estate and personal property taxes; home mortgage interest and points; gifts to qualified charitable organizations; casualty and theft losses; and certain job-related and miscellaneous expenses. You attach the completed Schedule A to your Form 1040 and enter the total itemized deductions amount on Form 1040, line 40.
2012 Instructions for Schedule A
When You'd Use Form 1040 Schedule A (Late/Amended Filing)
Most taxpayers file Schedule A along with their original Form 1040 by the April 15, 2013 deadline (or October 15, 2013 if they filed for an extension). However, life doesn't always go according to plan. If you filed your 2012 tax return but later realize you should have itemized instead of taking the standard deduction—or vice versa—you can file an amended return using Form 1040X.
The IRS gives you three years from the date you filed your original return (or two years from the date you paid the tax, whichever is later) to file an amended return and claim a refund. If you filed your 2012 return early—say, in March 2013—it's considered filed on the April 15 due date for purposes of calculating this deadline. This means you generally have until April 15, 2016 to amend your 2012 return.
When you file Form 1040X, you'll attach a new Schedule A showing the itemized deductions you should have claimed. The IRS will process your amended return and issue any additional refund you're owed, though amended returns typically take longer to process than original returns—often 8 to 12 weeks or more.
Key Rules or Details for 2012
Several important thresholds and limitations apply to Schedule A deductions. First, you can only deduct medical and dental expenses that exceed 7.5% of your adjusted gross income (the amount on Form 1040, line 38). For example, if your AGI is $50,000, you can only deduct medical expenses above $3,750. The first $3,750 provides no tax benefit.
For taxes, you must choose between deducting state and local income taxes or state and local general sales taxes—you cannot deduct both. You can use either your actual sales tax receipts or the optional sales tax tables provided in the instructions. Real estate taxes are deductible, but you cannot deduct fees for specific services like trash collection or charges that increase your property's value, such as assessments for new sidewalks.
Home mortgage interest is generally deductible, but limitations apply. Mortgages taken out after October 13, 1987 have dollar limits: $1 million for loans used to buy, build, or improve your home ($500,000 if married filing separately), and $100,000 for home equity loans used for other purposes ($50,000 if married filing separately). Your mortgage must be secured by your main home or second home.
Charitable contributions require documentation. For any single gift of $250 or more, you must have a written acknowledgment from the charity. If you donate property worth over $500, you must attach Form 8283. Remember that you cannot deduct contributions that provide you a benefit—for example, if you paid $100 for a charity dinner and the meal was worth $40, you can only deduct $60.
Job expenses and certain miscellaneous deductions face a 2% floor, meaning you can only deduct amounts exceeding 2% of your AGI. These include unreimbursed employee business expenses, tax preparation fees, and investment expenses.
Step-by-Step (High Level)
Filing Schedule A follows a logical progression. Start by gathering all your receipts, statements, and records for deductible expenses throughout 2012. This includes medical bills and insurance statements, property tax bills, Forms 1098 showing mortgage interest, donation receipts, and records of miscellaneous expenses.
Next, organize your expenses into the seven categories on Schedule A. Enter medical and dental expenses on line 1, then calculate whether they exceed the 7.5% threshold. Decide whether to deduct income taxes or sales taxes, and enter state and local taxes on line 5. Add real estate taxes (line 6) and personal property taxes (line 7). Enter your home mortgage interest from Form 1098 on line 10, and any other deductible interest on lines 11-14.
For charitable contributions, enter cash donations on line 16 and non-cash contributions on line 17. Add any casualty and theft losses on line 20, and job-related and miscellaneous expenses on lines 21-23 (remembering the 2% floor applies here). Include any other miscellaneous deductions on line 28.
Finally, add up all the amounts in the far right column and enter the total on line 29. Transfer this amount to Form 1040, line 40. Attach Schedule A to your return and file by the deadline.
Common Mistakes and How to Avoid Them
One of the most frequent errors is double-dipping—claiming the same expense both on Schedule A and somewhere else on your return, such as on Schedule C for business expenses or on Form 1040, line 29 for self-employed health insurance. Always check whether an expense belongs elsewhere before including it on Schedule A.
Another common mistake involves medical insurance premiums paid through an employer's cafeteria plan. You cannot deduct these on Schedule A if they were paid with pre-tax dollars and aren't included in box 1 of your W-2. Similarly, if you claimed a self-employed health insurance deduction on Form 1040, you must reduce your Schedule A medical premiums by that amount.
Taxpayers often try to deduct nondeductible taxes, such as federal income taxes, Social Security and Medicare taxes, or local fees for specific services like car inspections. Only state and local income (or sales) taxes, real estate taxes, and personal property taxes qualify.
For charitable contributions, forgetting to obtain required written acknowledgments for gifts of $250 or more leaves you vulnerable if the IRS questions your deduction. Always get contemporaneous written receipts. Also remember to reduce your deduction if you received any benefit in return, such as meals at a fundraising event.
Missing the income thresholds causes many rejected deductions. Don't forget that medical expenses, miscellaneous expenses, and casualty losses all have floors—you can't deduct amounts below the threshold, so keep careful records to maximize what does qualify.
What Happens After You File
After you mail your return with Schedule A attached, the IRS processes it through their computer systems. The IRS matches the information on your return against third-party reports like Forms W-2, 1098, and 1099. If everything matches and appears reasonable, your return is accepted and any refund is issued, typically within 21 days if you e-filed or 6-8 weeks if you mailed a paper return.
However, Schedule A can trigger additional scrutiny. The IRS uses statistical formulas to identify returns with deductions that are unusually high for your income level. Large charitable contributions, substantial medical expenses, or high miscellaneous deductions may flag your return for examination.
If selected for audit, you'll receive a letter from the IRS requesting documentation. This is why retaining records is crucial—you need receipts, cancelled checks, and written acknowledgments to substantiate every deduction you claimed. For 2012 returns, keep records for at least three years from the filing deadline (generally until April 15, 2016), though six years is safer if you substantially understated income.
Most audits are handled by mail correspondence where you simply send copies of your documentation. More complex audits may require an in-person meeting with an IRS examiner. If the IRS disallows deductions, you'll owe additional tax plus interest and possibly penalties, though you have appeal rights if you disagree.
FAQs
Can I itemize if my spouse takes the standard deduction?
No. If you're married filing separately and your spouse itemizes deductions, you must also itemize, even if your standard deduction would be larger. This is a special rule that applies only to married filing separately status.
Do I need receipts for all my charitable contributions?
You need a bank record or written acknowledgment from the charity for any cash contribution. For any single contribution of $250 or more (cash or property), you must have a written acknowledgment from the organization. For property donations over $500, you must file Form 8283. For property over $5,000, you generally need a qualified appraisal.
Can I deduct medical expenses I paid for my elderly parent?
Yes, if you provided over half your parent's support, even if you cannot claim your parent as a dependent because their income was too high. You can include medical bills you paid for any person you could have claimed as a dependent except that they had gross income of $3,800 or more.
What if I discover I should have itemized after I already filed?
File Form 1040X, Amended U.S. Individual Income Tax Return, within three years of filing your original return. Attach a completed Schedule A showing your itemized deductions. The IRS will process your amended return and send any additional refund owed.
Are points I paid when refinancing my mortgage fully deductible?
Generally no. Points paid to refinance a mortgage must be deducted over the life of the loan, not all at once. However, if you used part of the refinancing proceeds to improve your main home, the points related to the improvement may be fully deductible in 2012.
Can I deduct both state income tax and sales tax?
No. You must choose one or the other. Compare your state income tax (including withholding, estimated payments, and payments made with your 2011 state return) against your sales tax (using either actual receipts or the optional tables) and deduct whichever is larger.
What happens if I don't have a Form 1098 for mortgage interest I paid?
You can still deduct the interest on line 11 instead of line 10. However, if you paid $600 or more to an individual (not a financial institution), you must provide that person's name, address, and taxpayer identification number on Schedule A, and you should provide them with your Social security number as well.
Sources and Notes
All information in this guide comes from official IRS sources, including the 2012 Schedule A form, instructions, Publication 501, and related IRS guidance available at IRS.gov.
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