Last Updated : January 14, 2009
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Schedule A

Schedule A

Itemized Deductions

Purpose of the form:

  • The taxpayer may use this schedule to figure the itemized deductions. In most cases, the federal income tax will be less if a person takes the larger of his or her itemized deductions or standard deduction.
  • If the taxpayer itemizes then he can deduct a part of his medical and dental expenses and unreimbursed employee business expenses, and amounts he paid for certain taxes, interest, contributions and miscellaneous expenses. He can also deduct casualty and theft losses.
  • The taxpayer should not include on schedule A items deducted elsewhere such as Form 1040 or Schedule C, Schedule C-EZ, Schedule E or Schedule F.

Part I – Medical and Dental Expenses

Line 1: Medical and dental Expenses
Enter on this line the total of your medical and dental expenses after reducing these expenses by any payments received from insurance or other sources. The taxpayer can include expenses of

  • Himself, his spouse, and all dependents he claimed on his return.
  • His child whom he cannot claim as a dependent because of the rules for children of divorced or separated parents.
  • Any person the taxpayer could have claimed as a dependent on your return except that person received $3300 or more of gross income or filed a joint return.
  • Any person the taxpayer could have claimed as a dependent except that you and your spouse if filing jointly can are claimed as a dependent on someone else’s 2006 return.

While figuring the amount of Insurance on schedule A the taxpayer should not include

  • Any amounts included on Form 8885, line 4,
  • Any health insurance premiums paid to U.S treasury, and
  • Any Health coverage tax credits advance payments shown on form 1099-H.

For more details regarding reimbursements refer publication 502 and instructions
Of schedule A.

Line 2: Amount from form 1040 pg-2 line 38
The package enters here the amount from Form 1040 pg-2 line 38 (Adjusted Gross income)
as the taxpayer enters on line 1 his expenses of medical and dental.

Line 3:
The package enters on line 3 the result obtained by multiplying line 2 amount by 7.5%.
The taxpayer can deduct unreimbursed medical and dental expenses over this amount.

Line 4:
The package enters on this line the maximum amount deductible by subtracting line 3 from line 1 and entering the result here.

Part II– Taxes you Paid
Following taxes the taxpayer cannot deduct:

  • Federal income and excise taxes
  • Social security, Medicare, federal unemployment (FUTA) and Rail Road Retirement (RRTA) taxes.
  • Custom Duties.
  • Federal Estate and Gift taxes.
  • Certain state and local taxes including general sales tax , tax on gasoline , inspection fees, license fees etc.

Line 5: State and local income taxes

  • On line 5 inner enter the state and local income taxes paid in 2006 for some prior year excluding penalties , interest or state and local estimated tax payments made during 2006, including any part of a prior year refund you choose to have  credited for 2006 but do not check the checkbox named state local general sales tax.
  • If on line 5 inner you are entering General sales tax instead of income taxes then check the box named state local general sales tax.
  • On line 5 outer the package transfers amount from line 5 inner and from Form W-2, W-2G, 1099-R, 1099-miscellenous and 1099-G the amount named in fields state and local taxes withheld.

Line 6: Real Estate Taxes.

  • Enter on line 6 inner row-1 manually taxes (state, local or Foreign)paid by you on real estate you own that was not used for business. If the taxpayer received a refund or rebate in 2006 of real estate taxes paid in 2006, reduce the deduction by the amount of refund or rebate. If the refund or rebate was received in 2006 for a prior year, refer instructions of schedule A.
  • Enter on line 6 inner row-2 manually any other real estate taxes paid on Non –business property owned by the taxpayer.
  • On line 6 outer the package enters the sum of line 6 inner lines entered manually and taxes from Schedule C pg-1, schedule E pg-1 and from Form 8829.
  • Do not include the itemized charges for services to specific property or persons , charges for improvements that tend to increase the value of property, mortgage payments , taxes paid on sale of home.

Line 7: Personal Property Taxes

  • On line 7 inner row-1 the package enters the personal property taxes paid on business vehicles that were not claimed as business expense on schedule C , Schedule C-EZ , schedule F , Form 4835.
  • On line 7 inner rwo-2 enter manually the amount of personal property tax paid by the client, but only if it is based on value alone and is charges on Yearly basis.
  • On line 7 outer sum of line 7 inner row-1 and row-2 is done by the package.

Line 8: Other taxes
If the taxpayer has any deductible taxes not listed on line 5, 6 or 7, enter in the space provided the type of expense and the amount of tax. Include on this line income tax paid to a foreign country or U.S possession.

The taxpayer may avail an option to take a credit for the foreign tax instead of deduction on schedule A. for further details refer instructions of form 1040 pg-2 foreign tax credit.

Part II – Interest you paid
This portion must be completed if you are claiming vehicle expenses on line 1.

Home Mortgage Interest:
A Home mortgage is any loan that is secured by your main home or second home. It includes first and second mortgages, home Equity loans and refinanced mortgages.
For more details refer instructions of Schedule A.

Line 10 –Home mortgage interest paid and reported on Form 1098

  • Enter the amount on line 10 inner box of Home Mortgage interest and points reported on Form 1098 if the taxpayer has not entered it elsewhere in the return. For limitations on the amount of Home Mortgage Interest refer IRs publication 936.
  • If form 1098 box 3 shows a refund of overdue interest paid, do not reduce the deduction by the refund .instead see the instructions of Form 1098 for box 3.
  • If the taxpayer paid off the mortgage early, deduct any remaining points in the year the taxpayer paid off the mortgage.
  • On line 10 outer value comes from Form 8829 (business Use of Home)which are not deducted on that form, schedule E  line 12 proportionate amount if schedule A checkbox is checked  Form 8396 line 3 , and  line 10 inner .
  • If the taxpayer paid more interest than shown on Form 1098 then in the space provided attach an explanation.

 

Line 11 – Home mortgage interest paid and not reported on Form 1098

  • Enter in the space provided the recipient’s name , identification number, address and the amount of deductible mortgage interest paid by the taxpayer for which he or she did not receive a Form 1098 from the recipient.
  • If the recipient is an individual, the identifying number is his or her social security number. Otherwise, it is the employer identification number.
  • If you and at least one other person ( other than your spouse if filing jointly) were liable for and paid interest on the mortgage and the other person received Form 1098 then enter the explanation in the space provided.

Line 12 – Points not reported On Form 1098

  • Enter on this line the amounts of points not reported on Form 1098.Generally, points are shown on the taxpayer’s settlement statement. Points paid only to borrow money are generally deductible over the life of the loan.
  • Refer publication 936 to figure the amount the taxpayer can deduct and also the provisions relating to refinancing.
  • Points paid for other purposes, such as for lender’s services are not deductible.

Line 13 – Investment Interest Expense

  • The package transfers this amount from Form 4952 line 8.
  • Investment interest is interest paid on money the taxpayer borrowed that is allocable to property held for investment .it does not include any interest allocable to passive activities or to securities that generate tax-exempt income.
  • Exception: The taxpayer does not have to file Form 4952 if certain conditions apply. For conditions refer instructions of schedule A. In that case the taxpayer has to manually enter the amount on this line.

Part III – Gifts to Charity

Contributions you can deduct:

  • Contributions can be in cash (keep canceled checks, receipts, or Other reliable written records showing the name of the organization and the date and amount given), property, or out of pocket expenses a person paid to do volunteer work. If he or she drove to and from the volunteer work, he or she can take the actual cost of gas and oil or 14 cents a mile.
  • Gifts of $250 or more can be deducted only if the taxpayer has a statement of charitable organization showing the amount contributed and the value of estimated benefits received in return in the form of goods or services.
  • For contributions which cannot be deducted refer the instructions of schedule A.

Line 15 - Gifts by cash or check:

  • Enter on this line the total of gifts made by the taxpayer in cash or in check (including out of pocket expenses).
  • If the taxpayer’s charitable contributions are more than 20% of his or her AGI ( form 1040 line 38 ) the deductible amount may be limited. The taxpayer has to take care of it.

Line 16 – Gifts Other than by cash or check

  • Enter your contributions of property. If the taxpayer gave used items , such as clothing or furniture , deduct the fair market value of the thing at the time you gave them . For more details on determining the value of donated property see publication 561.
  • If the taxpayer made non cash contributions of $500 or more the taxpayer must complete Form 8283.
  • For deduction of contributions on clothing will be allowed only if the items are in good used condition or better. For more details refer instructions of Form 8283.
  • If the taxpayer’s charitable contributions are more than 20% of his or her AGI ( form 1040 line 38 ) the deductible amount may be limited. The taxpayer has to take care of it.

Line 17 – Carryover from Prior Year
Enter any carryover of contributions that the taxpayer could not deduct in an earlier year because they exceeded the adjusted Gross income. For more information refer publication 526.

Part IV – Casualty and Theft Losses

Line 19: Casualty and theft losses

  • If the taxpayer reports his casualty and theft losses on Form 4684 then depending upon the checkboxes checked on line 18 the package transfers the value from Form 4684 line 18 or line 21. Otherwise the taxpayer has to manually enter the casualty and theft losses.
  • Deduction of non business casualty losses can be made only to the extent that :
  • The amount of each separate casualty or theft loss is more than $100, and
  • The total amount of all losses during the year (reduced by the $100 limit as given above) is more than 10% of the amount on Form 1040 line 38.

 

Part V – Job Expenses and certain other miscellaneous deductions:
A person can deduct only the part of these expenses that exceeds 2% of the amount on
Form 1040 line 38.

Line 20 – Unreimbursed Employee Business Expenses

  • Enter on this line the total and necessary job expenses the taxpayer paid for which he or she was not reimbursed. An ordinary expense is one that is common and accepted in the taxpayer’s business. A necessary expense is one that is helpful and appropriate for the business.
  • If the taxpayer has filed Form 2106 or Form 2106EZ then the package enters the amount from Form 2106 line 10 or Form 2106EZ line 6 if these forms are present in the list. Otherwise the user has to enter manually the expenses and the type of expenses.

Note: Form 2106 / Form 2106EZ expenses are not transferred on this line if they are related to Armed Forces Reservist travel, Qualified performing Artist, A fee Based state or local Official, or Impairment related work expenses. They are then reported on form 1040 pg-1 Line 23. For More details refer instructions of schedule A.

Line 21 – Tax preparation Fees.
Enter on this line the fees paid for preparation of your tax return including fees paid for filing your return electronically. If any of these expenses was deducted on another form, such as schedule C or schedule E, then do not include them here.

Line 22 – Other Expenses

  • Enter the total amount paid by you to produce or collect taxable income and manage or protect property held for earning income. But do not include any personal expenses.
  • Enter in the space provided the type of expenses and their amounts the package will carry the total to the outer total of the form.
  • The examples of expenses to include on this line are legal and accounting fees, clerical help and office rent, custodial fees, share of investment expenses etc.

Line 23 to line 26:

  • The package does the sum of line 20, line 21 and line 22 and enters the result on line 23.
  • This result is then subtracted from the 2% of the amount (line 25) transferred from Form 1040 pg-2 line 38(line 24).
  • The final result is the total of deductible expenses on lines 20, 21 and 22.

 

Part VI – Other Miscellaneous deductions

Line 27:

  • Enter in the space provided any of the further expenses which the taxpayer has left to report or take a deduction on other forms. These expenses may be as under:
  • If any of these expenses are reported on their respective forms from where they are transferred by the package on this line the taxpayer need not enter manually value will flow from the lines specified.
  • Gambling losses that you enter on Form W-2G, bur not more than the amount of gambling winnings reported in box of form W-2G.
  • Casualty and theft losses of income –producing  property from Form 4684 line 35 and line 41b, or Form 4797 line 18a.
  • Federal estate tax on income in respect of a descendant from K-1E/T worksheet line 10.
  • Other deductions, portfolio, from the partners and shareholders K-1P/S worksheet line 13P code K.
  • Impairment related work expenses of a disabled person from Form 2106 or Form 2106EZ.

For more details and other deductions which are not subject to limit of 2% refer publication 529 and instructions of schedule A.

Part VII – Total Itemized Deductions

Line 28:

  • The package by itself calculates the value to be entered on this line and the checkboxes are also checked by the package itself. The user need not enter any amounts.
  • The package calculates the total of itemized deductions and carries the amount on Form 1040 pg-2 if it is larger than the standard deduction.
  • If the taxpayer chooses to itemize the deduction even though the standard deduction is larger, then the taxpayer is required to check the checkbox on schedule A line 29.
  • If the taxpayer’s AGI is more than $150500 ( $75250 if filing status is married filing separately) the package by itself uses the worksheet given named Itemized deduction worksheet on schedule A to calculate the allowable itemized deduction amount and transfers the amount on schedule A , line 28.

Line 29:
The taxpayer is required to check this checkbox manually, if the chooses to itemize the deductions even though the standard deduction is larger.

Itemized Deduction Worksheet:

  • On this worksheet  the package by itself calculated the amount of itemized deductions allowed if the taxpayer’s Adjusted Gross Income (AGI) on Form 1040  line 38 is more than $150500 if filing status is other than Married filing separately (more than $75250 if filing status is married filing separately).
  • From line 12 Total Itemized Deductions line the package by itself transfers the amount on line 28 of schedule A.
  • The package transfers the amount from line 28 of schedule A or standard deduction whichever is higher on Form 1040 pg-2 line 40.

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