Itemized deductions are expenses excluded from adjusted gross income to lower the amount of tax bill charged on an income.
Itemized deductions are expenses excluded from adjusted gross income to lower the amount of tax liability charged on an income. The key advantage is to reduce the amount of income to be taxed. And this related to each filer's tax bracket.
For a filer within a certain tax bracket, itemized deduction exempts a certain percentage from tax. For example, a $100,000 income earner may claim an itemized deduction of $17,000. The $17,000 exempted from the gross income yields $83,000 taxable income.
Itemized deductions and standard deductions are close options but the latter is not accessible in all cases. Not all taxpayers are eligible for standard deductions, and in such cases, itemized deduction becomes a viable option. Common criteria for each of the options include the eligibility of an individual to choose a standard deduction and a host of other requirements.
