Schedule A 2011 Instructions: Itemized Deductions Guide

standard deduction for tax year 2011. You must attach Schedule A to your Form 1040 when you file your federal tax return. The form allows you to deduct medical expenses, state and local taxes, mortgage interest, charitable contributions, and casualty losses that exceed specific thresholds established by the IRS for 2011.

Ten-Step Filing Process

1. You must gather receipts, statements, and canceled checks documenting all expenses claimed on Schedule A lines 1 through 29 per the 2011 instructions. Keep Forms W-2, charitable contribution acknowledgments, and mortgage interest statements organized before you begin. The IRS requires written substantiation for specific deductions, including noncash charitable contributions exceeding certain dollar amounts.

2. Enter your total medical and dental expenses on Schedule A, line 1, including payments for medical care, prescription medicines, and insurance premiums. Calculate the deductible portion by completing lines 2 through 4. Line 2 requires your adjusted gross income from Form 1040, line 38. Multiply that amount by 7.5 percent and enter the result on line 3. Subtract line 3 from line 1 and enter the result on line 4. You can only deduct medical expenses that exceed 7.5 percent of your adjusted gross income.

3. Report either state and local income taxes or state and local general sales taxes on

Schedule A, line 5, but you cannot deduct both types. Check box 5a if you elect to deduct income taxes, which include amounts withheld from your wages and estimated tax payments made during 2011. Check box 5b if you elect to deduct sales taxes using either your actual receipts or the optional sales tax tables provided in the 2011 instructions. Most taxpayers find the optional tables easier to use than tracking actual sales tax receipts throughout the year.

4. Enter real estate taxes you paid on property you own on line 6, provided the taxes were based on assessed property value. Personal property taxes appear on line 7 only if they were based solely on value and imposed every year. Examples include the portion of vehicle registration fees based on your car's value rather than its weight.

5. Substantiate all charitable contributions with a written acknowledgment from the charitable organization as required by the 2011 instructions. Noncash philanthropic

contributions exceeding specific dollar thresholds require Form 8283 attachment to your federal tax return. You must obtain a qualified appraisal for specific property donations and maintain detailed records of all gifts to charity.

6. Enter casualty and theft losses on Schedule A, line 20, only after applying both required limitations. First, reduce each separate casualty or theft event by $100 per occurrence.

Second, calculate whether your total losses exceed 10 percent of your adjusted gross income from Form 1040, line 38. You can deduct only the amount that exceeds 10 percent of your adjusted gross income after applying the $100 reduction to each event.

7. Do not claim deductions for expenses related to tax-exempt income, hobby losses, or personal use property on Schedule A. The 2011 instructions specifically prohibit these entries, and claiming ineligible deductions may result in penalties or additional tax liability. You should review Publication 502 for detailed guidance on allowable medical expenses and Publication 526 for charitable contribution rules.

Investment Interest and Mortgage Requirements

Attach Form 4952 if you claim the investment interest expense deduction on Schedule A, line

14, per the 2011 instructions. This form calculates the amount you can deduct in the current year, and any carry-forward amounts to future tax years. Line 13 reports mortgage insurance premiums you paid, which differ from investment interest expenses reported on line 14.

Report home mortgage interest and points shown on Form 1098 on line 10 of Schedule A.

Include interest paid to financial institutions on loans secured by your main home or second home. Line 11 captures mortgage interest you paid that was not reported on Form 1098, such as payments made to individuals or amounts exceeding what appears on your lender's statement.

Itemization Decision and Filing Requirements

Verify your total itemized deductions on Schedule A, line 29, and compare this amount to the standard deduction for your filing status before deciding whether to itemize. The 2011 standard deduction varies by filing status: single or married filing separately taxpayers receive $5,800, married filing jointly or qualifying widow(er) filers receive $11,600, and head of household filers receive $8,500. Taxpayers who are 65 or older or blind receive additional standard deduction amounts.

Transfer your Schedule A total from line 29 to Form 1040, line 40, only if your itemized deductions exceed the standard deduction for your filing status. The signature on Form 1040 covers all attached schedules, including Schedule A. Schedule A does not require a separate signature, and you must attach it to your Form 1040 when you file.

Retain all supporting documentation for at least three years after you file your federal tax return.

The IRS recommends keeping receipts, bank statements, charity acknowledgment letters, appraisals for noncash gifts, casualty loss photos, and insurance reports. Visit the IRS website to locate the correct mailing address for your 2011 Schedule A and Form 1040 based on your state of residence.

Filing Status Restrictions

Nonresident aliens cannot claim certain itemized deductions under the 2011 rules, and

Schedule A itemization remains available only to U.S. citizens and resident aliens with

U.S.-source income reportable on Form 1040. Married filing separately filers face specific limitations on itemized deductions. If you file married filing separately, both you and your spouse must either itemize deductions or both claim the standard deduction. One spouse cannot itemize while the other claims the standard deduction under the 2011 tax rules.

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