Question

1. when do we use Sch A?

2. what are the pros and contrast when using itemized deduction? in your opinion provide your best reaction to this format as a deduction.

Answer 1

1) Schedule A is used to list the itemized deductions needed to be deducted from the taxable income. Itemized deductions refers to the expenditure concerning various products and services which are wlligible to be subtracted from the Adjusted Gross Income AGI. It allows to pay less tax by individuals.

It helps a taxpayer to have ductions on allowable taxes so as they can be able to reduce their tax burden.

They may include medical and dental expenses; state and local taxes; various mortgage; charitable deductions; theft, etc.

2) Its pros and cons are :

Pros -

• More expenses can be claimed using itemized deductions as they are eligible for larger deductions like for the charitable income.
• There are chances for saving more amount of money. As it is liable for more deductions, one can get absolutely large refund of amounts. It depends on one's tax bracket.

Cons :

• It involves a lot of paper work and also it takes great efforts to itemize deductions. It requires to gather a lot of documents required for filing deductions and expenses needed to br tallied.
• There are little restrictions on some of the deductions being itemized. Like for medical excess of ten percent of adjusted gross income is only itemized. There are such limitations on other itemized deductions also.

According to me, one whose deductible expenses are over or crossing the standard deductions should make in use of this itemized deductions. It needs an effort to calculate all your tax deductions, but once done one can be sure as which format to use to save maximum income and are liable to pay less income tax.