What are itemized deductions?

One way to take deductions from your adjusted gross income (the “AGI”) is to itemize your deductions. As opposed to taking the standard deduction (a predetermined amount set by the tax code), you can calculate all of your expenses for the year and subtract appropriate expenses from your AGI, thereby lower your tax burden. While this is more complicated and time consuming than simply taking the standard deduction, taking itemized deductions often results in a significantly lower taxable income.