What is IRS Schedule A (Form 1040) (2014) for
IRS Schedule A (Form 1040) (2014) allows taxpayers to reduce their federal income tax by reporting itemized deductions instead of claiming the standard deduction. This form is designed for individuals whose deductible expenses—including medical and dental expenses, state and local taxes, mortgage interest, charitable contributions, and casualty and theft losses—exceed the basic standard amount for their filing status. By using Schedule A, taxpayers can lower their taxable income and potentially decrease the amount of federal taxes owed for the tax year.
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When You’d Use IRS Schedule A (Form 1040) (2014)
You would use this form when your total itemized deductions are greater than your standard deduction. The following situations commonly apply:
- Late Filing: You should complete Schedule A when filing a paper return or e-filed tax return after the deadline if your eligible expenses are high enough to reduce your federal income liability.
- Amended Return: You should file Form 1040X with a corrected Schedule A (Form 1040) if you initially claimed the standard deduction but later found that your itemizing deductions would yield a larger refund.
- Married Filing Separately: When one spouse itemizes, the other spouse must also itemize, even if it results in a smaller deduction, as the IRS requires consistent reporting for married couples.
- High Medical or Dental Bills: You should itemize if your medical expenses or dental expenses exceeded 10% of your adjusted gross income, or 7.5% if you or your spouse itemizes and either was 65 or older in 2014.
- Homeowners or Charitable Donors: You should file Schedule A if you paid significant mortgage interest, real estate taxes, or made large charitable contributions to religious organizations or charitable organizations during the tax year.
Before you start, review this checklist of documents to attach to your IRS return to ensure your paperwork is complete.
Key Rules or Details for Tax Year 2014
For the 2014 tax year, the Internal Revenue Service established several rules that determine how taxpayers can claim itemized deductions on Schedule A (Form 1040):
- Medical and Dental Expenses Threshold: Only the portion of medical and dental expenses that exceeds 10% of your adjusted gross income (7.5% if age 65 or older) can be deducted as eligible expenses.
- Itemized Deduction Limitation: High-income filers with an income level above $152,525 ($305,050 for married couples filing jointly) were subject to a limitation that reduced the overall itemized deduction amount.
- State and Local Taxes: You could deduct income taxes or sales taxes, but not both, and many taxpayers in states without local income taxes chose the sales tax option to lower their federal income tax.
- Mortgage Interest Rules: You could deduct home mortgage interest on acquisition debt up to $1 million and on home equity loans up to $100,000, as long as the loans did not exceed the fair market value of your home.
Unsure how to determine your adjusted gross income? Learn how to find your AGI from last year.
Step-by-Step (High Level)
Completing Schedule A (Form 1040) (2014) requires careful attention to detail. Each step builds on the previous one to help you claim your deductions accurately and avoid missing any eligible expenses:
- Gather Documentation: Collect all records, such as receipts for medical bills, charitable donations, real estate taxes, and mortgage interest statements, before preparing your tax return.
- Calculate Medical and Dental Expenses: Total your unreimbursed medical expenses and dental expenses, and deduct only the portion that exceeds 10% (or 7.5% if applicable) of your adjusted gross income.
- Report Taxes Paid: List your state and local taxes, real estate taxes, and personal property taxes, ensuring that you do not claim both income taxes and sales taxes.
- Record Interest Paid: Enter the interest paid on your home mortgage, home equity loan, or income-producing property; ensure you attach all supporting forms to verify the interest paid.
- List Charitable Contributions: Include charitable contributions made to religious organizations or other philanthropic organizations, and attach Form 8283 for non-cash donations exceeding $500.
- Enter Other Deductions: Record any casualty and theft losses, gambling losses, customs duties, or impairment-related work expenses for a disabled person if applicable to your filing status.
- Calculate Your Total Itemized Deductions: Add up all sections to find your total itemized deductions, then transfer this total to the appropriate line on your Form 1040 to reduce your taxable income.
Common Mistakes and How to Avoid Them
Even careful taxpayers make errors on IRS Schedule A (Form 1040) (2014), but most are easy to prevent by following these steps:
- Exceeding the AGI Thresholds: Always calculate your adjusted gross income before claiming medical or miscellaneous deductions, and verify that your expenses exceed the required percentage to qualify as eligible expenses.
- Including Reimbursed Expenses: Never include any medical bills, job-related costs, or other expenses that were reimbursed by your employer or insurance, as only out-of-pocket amounts are deductible.
- Claiming Both Income and Sales Taxes: Choose either income taxes or sales taxes when reporting state and local taxes to avoid double claiming, which may cause delays in processing your tax return.
- Missing Mortgage Details: When your home mortgage interest is not reported on Form 1098, always include the lender’s name, address, and taxpayer identification number to ensure your deduction is validated correctly.
- Failing to Keep Receipts for Donations: Keep written acknowledgments and receipts for all charitable contributions, especially those to religious organizations and other philanthropic organizations, as the Internal Revenue Service may request proof during review.
- Claiming Ineligible Deductions: Review the official IRS instructions before listing any deductible expenses. Avoid including federal estate tax, federal unemployment, Social Security, or life insurance premiums, as these are non-deductible expenses.
What Happens After You File IRS Schedule A (Form 1040) (2014)
Once you file your tax return with Schedule A (Form 1040) attached, the IRS reviews and processes it. Electronic filings are typically processed within three weeks, while paper returns may take six to eight weeks to process. The IRS compares reported data with third-party forms, such as mortgage interest statements, and verifies calculations for accuracy. If adjustments are needed, the IRS will notify you by mail and request documentation if necessary. Refunds can be tracked through the “Where’s My Refund?” tool.
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FAQs
Should I itemize deductions or take the standard deduction?
You should itemize when your total itemized deductions are higher than your standard deduction for your filing status. This approach helps reduce your federal income tax by allowing you to claim more deductible expenses on your Schedule A form 1040.
Can I deduct medical expenses my insurance didn’t pay?
Yes, you can deduct medical and dental expenses that exceed 10% of your adjusted gross income, or 7.5% if you or your spouse was 65 or older in 2014. These include out-of-pocket medical expenses, prescription costs, and qualified medical treatments.
Can I deduct property taxes and mortgage interest on a second home?
Yes, you can deduct home mortgage interest and real estate taxes for one primary home and one second home. Ensure both meet Internal Revenue Service requirements and that your mortgage interest statement clearly reflects the interest paid for the tax year.
How do I claim charitable contributions?
List your charitable contributions under the “Gifts to Charity” section of Schedule A (Form 1040). Keep receipts or written acknowledgments from charitable organizations and religious organizations, especially for donations exceeding $250 or for non-cash items requiring Form 8283.
