Understanding Itemized Deductions

When filing their tax returns, most taxpayers can choose the greater of the standard deduction (think of this as the default) or itemized deductions on Schedule A (Form 1040).

Did You Know?

For 2023, the standard deduction is $13,850 for filers who are single or married filing separately, $27,700 for married filing jointly and $20,800 for heads of household.

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Key Takeaway

By understanding what expenses and activities qualify as itemized deductions, you can help your clients minimize their tax obligations by suggesting strategies that help maximize tax deductions.

What Can Clients Deduct?

State and Local Taxes
State and local taxes, including sales tax, property tax and personal property tax, can be deducted up to $10,000 per year for all filing statuses.

Investment Interest Expense
The interest paid on money borrowed to purchase taxable investments is deductible up to the amount of net investment income.

Home Mortgage Interest
Interest paid on the first $750,000 of a mortgage can be deducted. This limit applies to all filing statuses.

Medical and Dental Expenses
Most medical and dental expenses that exceed 7.5% of AGI can be deducted.

Charitable Donations
Amounts given to charity can be deducted subject to certain limits. Charitable contributions can generally be deducted up to 60% of adjusted gross income (AGI), yet, in some cases, 20%, 30% or 50% limits may apply.

Additional Expenses
Expenses such as casualty and theft losses subject to certain limits, gambling losses and federal tax paid on income in respect of decedent as well as several other categories may also be deducted.

Next Step

Encourage clients to invite their CPAs into the conversation to understand how their full financial picture—charitable gifts, trusts and other holdings—can impact their tax deductions.

KEEP LEARNING

Understanding the Effective Tax Rate

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Disclosure

Source: Internal Revenue Service.

Examples provided are for illustrative and informational purposes only and not intended to be reflective of results you can expect to achieve.

The Firm does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Tax laws are complex and subject to change. Investors should always consult their own legal or tax professionals for information concerning their individual situations.

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LEARN | Understanding Itemized Deductions

When filing their tax returns, most taxpayers can choose the greater of the standard deduction (think of this as the default) or itemized deductions on Schedule A (Form 1040).

Prefer to save for later?

Key Takeaway

What Can Clients Deduct?

State and Local Taxes
State and local taxes, including sales tax, property tax and personal property tax, can be deducted up to $10,000 per year for all filing statuses.

Investment Interest Expense
The interest paid on money borrowed to purchase taxable investments is deductible up to the amount of net investment income.

Home Mortgage Interest
Interest paid on the first $750,000 of a mortgage can be deducted. This limit applies to all filing statuses.

Medical and Dental Expenses
Most medical and dental expenses that exceed 7.5% of AGI can be deducted.

Charitable Donations
Amounts given to charity can be deducted subject to certain limits. Charitable contributions can generally be deducted up to 60% of adjusted gross income (AGI), yet, in some cases, 20%, 30% or 50% limits may apply.

Additional Expenses
Expenses such as casualty and theft losses subject to certain limits, gambling losses and federal tax paid on income in respect of decedent as well as several other categories may also be deducted.

Next Step

Encourage clients to invite their CPAs into the conversation to understand how their full financial picture—charitable gifts, trusts and other holdings—can impact their tax deductions.

Understanding the Effective Tax Rate

Eaton Vance

Eaton Vance

Eaton Vance

When filing their tax returns, most taxpayers can choose the greater of the standard deduction (think of this as the default) or itemized deductions on Schedule A (Form 1040).

Prefer to save for later?

Key Takeaway

What Can Clients Deduct?

State and Local Taxes State and local taxes, including sales tax, property tax and personal property tax, can be deducted up to $10,000 per year for all filing statuses.

Investment Interest Expense The interest paid on money borrowed to purchase taxable investments is deductible up to the amount of net investment income.

Home Mortgage Interest Interest paid on the first $750,000 of a mortgage can be deducted. This limit applies to all filing statuses.

Medical and Dental Expenses Most medical and dental expenses that exceed 7.5% of AGI can be deducted.

Charitable Donations Amounts given to charity can be deducted subject to certain limits. Charitable contributions can generally be deducted up to 60% of adjusted gross income (AGI), yet, in some cases, 20%, 30% or 50% limits may apply.

Additional Expenses Expenses such as casualty and theft losses subject to certain limits, gambling losses and federal tax paid on income in respect of decedent as well as several other categories may also be deducted.

Next Step

Encourage clients to invite their CPAs into the conversation to understand how their full financial picture—charitable gifts, trusts and other holdings—can impact their tax deductions.

Understanding the Effective Tax Rate

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State and Local Taxes
State and local taxes, including sales tax, property tax and personal property tax, can be deducted up to $10,000 per year for all filing statuses.

Investment Interest Expense
The interest paid on money borrowed to purchase taxable investments is deductible up to the amount of net investment income.

Home Mortgage Interest
Interest paid on the first $750,000 of a mortgage can be deducted. This limit applies to all filing statuses.

Medical and Dental Expenses
Most medical and dental expenses that exceed 7.5% of AGI can be deducted.

Charitable Donations
Amounts given to charity can be deducted subject to certain limits. Charitable contributions can generally be deducted up to 60% of adjusted gross income (AGI), yet, in some cases, 20%, 30% or 50% limits may apply.

Additional Expenses
Expenses such as casualty and theft losses subject to certain limits, gambling losses and federal tax paid on income in respect of decedent as well as several other categories may also be deducted.