Schedule A 2012 Instructions: Itemized Deduction Checklist

Checklist

Schedule A allows taxpayers filing Form 1040 to itemize deductions instead of claiming the standard deduction for tax year 2012. You must compare your total itemized deductions to your standard deduction and claim the larger amount to reduce your taxable income.

Nonresidents filing Form 1040-NR can use Schedule A to claim itemized deductions, including state and local income taxes, but they cannot claim the standard deduction. The form does not accommodate filers using Form 1040-EZ or Form 1040-A.

Medical and Dental Expenses Deduction Requirements

You can deduct only the portion of your medical and dental expenses that exceeds 7.5% of your adjusted gross income for tax year 2012. Qualified expenses include payments to licensed medical professionals, prescription medicines, insulin, hospital care, nursing services, qualified long-term care services, medical insurance premiums, and certain travel costs for medical care.

Calculate your adjusted gross income from Form 1040, line 38, before determining your deductible medical expenses on Schedule A, Line 1.

You must reduce your medical expenses by any reimbursements received from insurance or other sources during the tax year. Include medical expenses you paid for yourself, your spouse, all dependents claimed on your return, and specific other qualifying individuals. Subtract any self-employed health insurance deduction claimed on Form 1040, line 29, from your insurance premiums before entering amounts on Schedule A.

Taxes You Paid: State, Local, and Property Taxes

You must choose between deducting state and local income taxes or state and local general sales taxes on Line 5. You cannot deduct both types of taxes in the same tax year. State and local income taxes include amounts withheld from wages shown on Form W-2, estimated tax payments made during 2012, and prior year taxes paid with your 2011 state or local income tax return.

Real property taxes deductible on Line 6 include only taxes assessed uniformly at a like rate on all real property throughout your community for general governmental purposes. You cannot deduct charges for improvements that increase property value, itemized charges for specific

services, homeowners' association fees, or assessments for sidewalks and similar improvements. Personal property taxes on Line 7 must be based solely on value and imposed annually to qualify as deductible.

Home Mortgage Interest and Points Reporting

Report mortgage interest shown on Form 1098 under your social security number on Line 10 of

Schedule A for tax year 2012. Home mortgage interest includes amounts paid on first mortgages, second mortgages, home equity loans, and refinanced mortgages secured by your main home or second home. Your deduction may be limited if you took out mortgages after

October 13, 1987, with acquisition debt exceeding $1 million or home equity debt exceeding

$100,000.

Points paid to refinance a mortgage generally must be deducted over the life of the loan rather than in the year paid. You can deduct the remaining points in full during the year you pay off the mortgage early. Report mortgage interest not shown on Form 1098 on Line 11, including amounts paid to individuals and situations where you shared mortgage responsibility with other borrowers.

Investment interest expense requires filing Form 4952 to calculate your allowable deduction based on net investment income limitations. Qualified mortgage insurance premiums paid under contracts issued after December 31, 2006, in connection with home acquisition debt may be deductible on Line 13.

Charitable Contributions Documentation Standards

Cash donations of $250 or more require contemporaneous written acknowledgment from the charitable organization showing the contribution amount and whether you received goods or services in return. Written acknowledgment must be obtained by the earlier of your tax return filing date or the due date, including extensions. Noncash property donations totaling more than

$500 require filing Form 8283 with your tax return.

You must retain canceled checks, bank records, or written communications from the charity for all cash contributions, regardless of amount. Contributions to qualified organizations can be verified using the Internal Revenue Service Tax Exempt Organization Search tool. Your deduction for noncash property depends on whether you held the property more than one year and whether the charity uses the property for its exempt purpose.

Casualty and Theft Loss Limitations

Each separate casualty or theft event must exceed $100 before you can claim any deduction for personal use property. After applying the $100 reduction to each event, you can deduct only the total amount exceeding 10% of your adjusted gross income. Complete Form 4684 for each casualty or theft loss and attach it to your tax return with Schedule A.

Casualty losses include damage from sudden, unexpected events such as storms, fires, car accidents, and similar disasters. Theft losses occur when someone unlawfully takes your property. Calculate each loss by comparing the property's fair market value immediately before and after the event, then reduce this amount by any insurance reimbursements received or expected.

Miscellaneous Deductions Subject to Limitation

Unreimbursed employee business expenses, tax preparation fees, and investment advisory fees appear on Line 23 as miscellaneous deductions. You can deduct these expenses only to the extent the total exceeds 2% of your adjusted gross income under the 2012 federal law.

Qualifying expenses must be ordinary and necessary costs incurred to produce or collect income, or to manage income-producing property.

Comparing Itemized Deductions to Standard Deduction

Complete Line 29 to calculate your total itemized deductions from all categories on Schedule A for tax year 2012. Compare this total to the standard deduction amount for your filing status and age. You benefit from itemizing only when your total itemized deductions exceed your available standard deduction.

Sign and date Schedule A before attaching it to Form 1040 in the correct filing sequence.

Include all required supporting forms, such as Form 4684 for casualty losses, Form 8283 for noncash charitable contributions, and Form 4952 for investment interest expense. Retain copies of charitable acknowledgment letters and other substantiation documents with your tax records.

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