Calculating the estimated deductions annually for your income tax returns is pretty challenging. Most businesses and individual taxpayers hire accountants to manage the deductions, as this is one of the few ways you can reduce your tax liability and save yourself a few hundred dollars in income tax.

Taxpayers have a choice between standard and itemized deductions. These can be found in Schedule A of Form 1040 (the standard income tax return form used by people who report a taxable income in a calendar year). Here are the deductions that the IRS has allowed taxpayers to itemize.

Unreimbursed Medical Expenses

It’s a bit difficult to calculate unreimbursed medical expense deductions and even more difficult for a taxpayer to qualify for this. Ideally, it covers the amount you have spent on medical expenses from your pocket. The government has set a 7.5% threshold for this category, meaning if your medical expense goes above 7.5% of your gross income for the year, you can deduct it from your income tax.

Interest on Mortgage

If you took a loan of $750,000 or lesser, your interest on this mortgage is deductible. Make sure you ask your bank or private moneylender to send you a statement that shows the loan amount and deductible interest. If you borrowed before Dec 16, 2017, you are eligible for interest deductibles for a loan up to 1 million. This is allowed for home loans and the line of credit borrowed to build a new home or renovate the existing one.

Real estate and State Taxes

Personal property and state taxes are also deductible for people who choose itemized deductions. Note that if you have got a refund for these taxes from the state authorities, this will be included in your taxable income. This applies if you itemized deductions in the previous calendar year. The maximum limit for these deductions combined is $10,000, and it’s only applicable to state taxes. Foreign taxes are excluded.

Do not include state or property tax you have paid in advance for the coming year in your current year’s itemized deductions.

Charitable Donations

The amount you have donated to the charity is also counted in the itemized deductions, although IRS has set limitations. The charitable amount shouldn’t exceed 60% of your adjusted gross income for the year. This is for a cash donation. The total deductions for other types of charitable donations are limited to 30-50 percent of your AGI.

Theft Losses

If you have experienced a theft or casualty loss, specify it on the Schedule A form. There’s a condition, though. The loss amount must exceed 10% of your adjusted gross income, and that too after deducting $100 from the loss. If you receive reimbursement of this loss later, this will be counted as taxable income.

There can be other deductibles, such as gambling losses or a large amount lost in partnership. It’s important to review the current IRS laws regarding estimated deductions carefully and list the deductibles (that you are eligible for) on Schedule A.