2016 Schedule A Instructions: Itemized Deductions Checklist

Checklist

Schedule A itemizes deductions instead of using the standard deduction for tax year 2016. You must compare your total itemized deductions against the standard deduction amount for your filing status to determine which method reduces your federal income tax more effectively. The

2016 form applies medical expense thresholds, substantiation rules for charitable contributions deductions, and state and local tax deduction limitations specific to that tax year.

Determining Whether to Itemize

You should itemize only if your total itemized deductions on Schedule A exceed your standard deduction for 2016. Gather and organize receipts, canceled checks, bank statements, and written acknowledgments for all deductible expenses throughout tax year 2016. Schedule A allows you to deduct portions of your medical expenses, state and local tax deductions, mortgage interest deduction, charitable contributions deduction, and certain other qualifying expenses.

Medical Expenses and Adjusted Gross Income

Thresholds

Medical and dental expenses must exceed a specific percentage of your adjusted gross income before you can claim any deduction on Schedule A. For tax year 2016, you generally deduct only the portion of medical expenses that exceeds ten percent of the amount shown on Form

1040 line 38. However, if either you or your spouse was born before January 2, 1952, you can deduct medical expenses exceeding 7.5 percent of your adjusted gross income instead.

Document all medical and dental expenses with receipts and proof of payment before entering amounts on Line 1 of Schedule A. The lower 7.5 percent threshold applies to your entire return when you file jointly, and one spouse meets the age requirement.

State and Local Tax Deductions

Line 5 of Schedule A requires you to choose between deducting state and local income taxes or state and local general sales taxes. Check box (a) if you elect to deduct income taxes, or check box (b) if you elect to deduct general sales taxes, but you cannot deduct both types of taxes

simultaneously. This choice between income taxes and sales taxes has been available since the

American Jobs Creation Act of 2004.

Calculate state and local income taxes actually paid during 2016, including

• State and local income taxes withheld from your salary are shown on Form 1098 and

other tax documents.

• State and local estimated tax payments made during 2016, including any prior year

refund credited to your 2016 taxes.

• State and local income taxes paid in 2016 for a prior year when you filed your state or

local tax returns.

You may use actual expenses or optional sales tax tables published by the Internal Revenue

Service to calculate your sales tax rate deduction if you choose general sales taxes instead of income taxes.

Home Mortgage Interest and Property Taxes

Compile mortgage interest statements on Form 1098, property taxes bills, and home equity loan documentation to support entries on Lines 10 and 11 for tax year 2016. Your mortgage interest deduction may be limited if you took out mortgages after October 13, 1987, and certain dollar thresholds apply based on how you used the loan proceeds. Investment interest expense requires Form 4952 if you claim deductions for interest paid on money borrowed to purchase taxable investments.

Enter real estate taxes you paid on property you own for personal use on Line 6 of Schedule A.

Include only taxes assessed uniformly at a like rate on all real property throughout the community and used for general community or government services. Do not include itemized charges for specific services to your property, such as trash collection fees or water consumption charges.

Charitable Contributions Deduction Requirements

Written acknowledgment from the charity is required only for charitable contributions of $250 or more per gift. For contributions under $250, a bank record, canceled check, receipt, or other written communication from the charity provides sufficient substantiation under Internal Revenue

Service regulations. You must obtain written acknowledgment before the earlier of the date you file your original return or the due date for filing your return.

Gifts by cash or check appear on Line 16 of Schedule A, while non-cash contributions appear on Line 17. You must attach Form 8283 to your return if your non-cash charitable contributions deduction exceeds $500 in value for tax year 2016.

Additional Forms and Schedule A Completion

Complete Schedule A line by line following 2016 instructions without skipping lines or leaving blank spaces where the form requires zero or not applicable entries. Attach all required supporting documents, including Form 1098 for mortgage interest, Form 4684 for casualty and theft losses, Form 2106 for unreimbursed employee expenses, and Form 8962 for premium tax credit reconciliation if applicable.

Enter your name exactly as shown on Form 1040 and your social security number in the header section of Schedule A. Schedule A does not require any signature, date, or witness because it functions as an attachment to Form 1040, which contains the signature section for your entire return.

Itemized Deductions Phase-Out Limitation

For tax year 2016, itemized deductions were subject to the Pease limitations phase-out for taxpayers with adjusted gross income exceeding specific thresholds—line 29 of Schedule A addresses this limitation, which reduces total itemized deductions for high-income filers. The phase-out begins at $259,400 for single filers, $311,300 for married filing jointly, $285,350 for head of household, and $155,650 for married filing separately.

Schedule A, Line 29, directs you to complete the Itemized Deductions Worksheet in the instructions if your Form 1040, Line 38, amount exceeds $155,650. This worksheet calculates the reduction to your total itemized deductions based on your income scale and filing status.

The Pease limitations remained in effect throughout tax year 2016 and were not suspended until the Tax Cuts and Jobs Act took effect for tax year 2018.

Nonresident Alien Limitations

Nonresident aliens can claim certain itemized deductions even when those deductions do not relate to effectively connected income from a United States trade or business. State and local

income taxes, casualty and theft losses from federally declared disaster areas, and charitable contributions to United States organizations qualify as allowable deductions for nonresident aliens regardless of income source. Other itemized deductions must be effectively connected with a United States trade or business to be deductible.

Nonresident aliens file Form 1040NR instead of Form 1040 and use a different version of

Schedule A designed specifically for nonresident tax preparation requirements. The standard deduction does not apply to nonresident aliens, making itemized deductions particularly important for reducing taxable income on nonresident returns.

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