If total itemized tax deductions are more than the standard deduction, it's usually smart to itemize. For most taxpayers, purchasing a homemakes it worthwhile to itemize deductions because they can deduct interest, real estate tax, and, for loans taken out after 2006, certain mortgage insurance premiums. In 2010, you can deduct the full amount of your itemized tax deductions and not be limited by your adjusted gross income. Here are some popular (and often overlooked) itemized tax deductions not related to home ownership:

  • Medical expenses — In addition to what you've spent on doctors, hospitals and medicine, other tax deductible items include health insurance premiums, prescription eyeglasses and contact lenses, hearing aids, medical transportation, equipment for disabled people, and nursing home expenses. This is particularly true of large uninsured medical and dental expenses.
  • State and local income taxes — This category includes income tax or sales tax and personal property tax.
  • Charitable contributions — These include cash and property such as new and used household goods and items, securities, and vehicles donated to qualified charitable organizations. 
  • Casualty losses — If you suffered a loss because of theft, fire, storm damage or other casualty, you can deduct an unreimbursed loss if it is more than the sum of $100 and 10% of your adjusted gross income.
  • Unreimbursed out-of-pocket job expenses — Tax-deductible expenses include vehicle expenses (other than commuting), travel expenses, uniforms, union dues and continuing education expenses.
  • Miscellaneous expenses — Safe-deposit box fees, investment expenses, tax preparation fees and certain legal fees are examples of miscellaneous tax deductions. The tax deduction for this category of expenses is allowed only for the total of these expenses and unreimbursed job expenses that is more than 2% of your adjusted gross income. Note: There are a few miscellaneous tax deductions that are not subject to the 2% floor. These include repayments of amounts exceeding $3,000 that you previously included in your income, gambling losses, estate tax on income in respect of a decedent, and a decedent's investment in a pension.