How to Itemize Taxes When Claiming Dependents

 

The article below is accurate for your 2017 taxes, the one that you file this year by the April 2018 deadline, including a few retroactive changes due to the passing of tax reform. Some tax information below will change next year for your 2018 taxes, but won’t impact you this year. Learn more about tax reform here.

Overview

Claiming dependents and itemizing deductions is an effective way to save money on your income taxes. Each dependent you claim allows you to reduce your taxable income by one exemption. And although itemizing your deductions means giving up the standard deduction, you can always choose the one that provides the most tax savings. When you itemize, you can deduct a number of expenses including medical and dental bills, mortgage interest and charitable donations.

Step 1: Form 1040

Use Form 1040 to file your taxes. You can use Form 1040A to file if you are claiming dependents, but not if you are also itemizing deductions.

Step 2: Dependents/Exemptions

List all dependents you are claiming on the first page of your Form 1040. You will need to enter each dependent's full name, Social Security number and their relationship to you. On the second page of your tax return, you can claim an exemption for each dependent you list. The exemption is a fixed amount that generally increases each year, and reduces your taxable income in the same way a deduction does.

Step 3: Itemize your deductions

Use Schedule A to itemize your deductions. The instructions to the Schedule A list all the types of expenses you can itemize. The schedule requires you to report each expense in one of seven categories. When you complete Schedule A, be aware that each category of expenses may have limitations on the amount you can deduct.

Step 4: Include deductions with tax return

Transfer your total itemized deductions to the second page of your tax return. This amount and your exemptions are subtracted from your adjusted gross income to arrive at your taxable income. This final income amount is the total that is subject to income tax rates.

Let TurboTax do the hard work for you

The steps above are for calculating your taxes by hand. If you use TurboTax, we’ll just ask you simple questions about things like your income, home and family situation and do all the calculations for you. You don’t need to know anything about dependents or exemptions – we’ll tell you which deductions you qualify for, fill in all the right forms, and help you get the biggest tax refund you deserve.

Things you'll need

• Form 1040
• Schedule A