• Itemized deductions are typically entered on Schedule A of Form 1040.TAX TIME image by brelsbil from Fotolia.com
  
  Itemizing your deductions on your tax return reduces your taxable income and saves money. A tax deduction is a dollar figure you're allowed to subtract from your total income for specific expenses, donations and personal loss. The Internal Revenue Service (IRS) permits tax deductions for a variety of expenses, including certain home ownership costs, items used in your line of work and property you lost due to theft.
  
  

Review Your Expenses and Losses

• Several deductions may be taken for personal expenses and financial or property loss. Out-of-pocket medical and dental costs are deductible (depending on your salary), as well as interest paid on a student loan and money not reimbursed for employment items such as uniforms. Homeowners benefit from deductions for home-related costs, including interest and points paid on a mortgage and property taxes. Loss of your personal property and real estate due to theft or disaster may be deductible if the IRS criteria for your specific loss is met and you did not receive insurance money.
  
  

Keep Your Records

• Itemized deductions must be backed by proof that the expenses were paid or the loss incurred. Keep all receipts for charitable donations, as well as an appraisal of the item if the IRS guidelines require a value report. Although receipts are not sent with returns, the IRS has the right to ask you for proof at a later date. Failure of a taxpayer to provide supporting records of itemized deductions results in fines and immediate tax return recalculations. Receipts for expenses paid and statements of loss and theft, such as a home inspection or police report, typically serve as acceptable proof for the IRS.
  
  

Know What You Can't Deduct

• Deducting for items and expenses not allowed under IRS rules may increase your risk of an audit, which is a comprehensive IRS review of your tax returns for prior tax years. You may incur penalties for wrongly deducted items. If errors or questionable items are found on your prior returns, the fees can add up quickly.