Schedule A (Form 1040): A guide to itemized deductions for US expats

Written by  Ines Zemelman, founder and President at TFX

Last updated Mar 27, 2026

When it comes to taxes, US citizens living abroad often ask the same question: Should I itemize my deductions or take the standard deduction?

Schedule A (Form 1040) is a valuable tool for taxpayers who want to maximize their deductions by listing specific eligible expenses. Here's everything you need to know about Schedule A, why it matters for US expats, and how to make it work for you.

Key takeaways:

• The medical expense deduction threshold is 7.5% of your AGI.
• The SALT deduction cap increased from $10,000 to $40,000 under the 2025 OBBBA legislation, though it phases out for taxpayers earning over $500,000.
• Foreign real property taxes are generally excluded from the SALT deduction.
• If your total qualifying expenses exceed the standard deduction for your filing status, itemizing deductions on Schedule A will likely save you more money.

What is Schedule A, and why does it matter?

Schedule A is a form attached to your Form 1040 that allows you to itemize deductions instead of taking the standard deduction. By itemizing, you report specific expenses – like medical costs, mortgage interest, or charitable donations – that reduce your taxable income.

Understanding when Schedule A applies to your situation is the first step toward a smarter filing strategy.

Standard deduction vs. itemized deductions

The IRS sets a standard deduction each year – a fixed amount you can deduct from your income without providing detailed records.

The IRS adjusts these amounts annually for inflation, and the One Big Beautiful Bill Act (OBBBA), passed in 2025, introduced additional increases through tax reform. Here's a comparison of the most current figures:

If your total eligible expenses exceed the standard deduction for your filing status, itemizing on Schedule A might save you more money.

To itemize, you'll need to gather documentation for qualifying expenses – like medical bills, mortgage interest statements, or charitable donation receipts – and record these amounts in the appropriate sections of Schedule A.

Each category has specific rules and limits, so following IRS guidelines closely matters. Once completed, Schedule A is attached to your Form 1040 and submitted with your tax return.

Who should use Schedule A?

Not everyone benefits from itemizing deductions. The math is straightforward: if your qualifying expenses add up to more than the standard deduction for your filing status, Schedule A is worth your time.

1. Taxpayers with high deductions

If you've had a year with hefty medical bills, significant charitable donations, or high property taxes, itemizing is likely the better option. The more your qualifying expenses exceed the standard deduction, the more you stand to save.

2. US expats with unique circumstances

Expatriates often deal with unique tax situations worth understanding:

• Donations to foreign charities are generally not deductible unless made through a US qualified organization that controls the funds and the gift is not earmarked for the foreign charity.
• Mortgage interest on a home in the US or overseas.
• Foreign real property taxes generally are not deductible on Schedule A for a personal residence. Form 2555 is for the foreign earned income exclusion and the foreign housing exclusion or deduction, and Schedule E is for rental real estate income and expenses.

NOTE! Expats must also manage tax treaties, foreign earned income exclusions, and other factors that impact their US tax liability.

Key categories of itemized deductions on Schedule A

Here's a breakdown of what you can deduct on Schedule A, including rules that are especially relevant for expats living abroad:

Medical and dental expenses

You can deduct unreimbursed medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI).

This includes:

• Doctor visits, surgeries, and prescriptions.
• Health insurance premiums (if not paid pre-tax).
• Travel costs for medical care (yes, even that Uber to the ER).

NOTE! If you live abroad and rely on foreign healthcare systems, expenses like private insurance or treatments not covered may be deductible.

State and local taxes (SALT)

Under the 2025 OBBBA legislation, the SALT deduction cap increased from $10,000 to $40,000. You can deduct up to this amount for:

• State and local income taxes or sales taxes (choose one).
• Property taxes on US real property.

NOTE! This higher limit phases out for taxpayers with income exceeding $500,000. Additionally, foreign real property taxes are generally excluded from this deduction – so if you own property abroad, those taxes won't count toward the cap.

Mortgage interest

Interest on your home mortgage is deductible, with limits:

• Loans taken before December 15, 2017, are deductible up to $1 million of mortgage debt.
• Loans after this date are capped at $750,000.

NOTE! If you own property abroad, mortgage interest may still qualify – but only if it's a secured debt tied to a qualified home, meaning the lender must hold a legal claim on the property as collateral.

Charitable contributions

Donations to IRS-qualified organizations are deductible, with limits that vary by contribution type. Cash contributions are deductible up to 60% of your AGI; non-cash donations like property generally follow lower limits.

This includes cash donations, property, and even expenses related to volunteering (mileage counts).

NOTE! Contributions to foreign charities generally aren't deductible unless the organization has US approval. Always check the IRS list of qualified organizations before making a big donation.

Casualty and theft losses

You can only deduct losses from federally declared disaster areas – such as hurricanes, wildfires, or floods. Casualty losses are now far less common due to changes under the Tax Cuts and Jobs Act (TCJA).

Losses from theft, personal accidents, or property damage unrelated to a federally declared disaster do not qualify.

The expat advantage: Itemized deductions for overseas living

While expats often use tools like the Foreign Earned Income Exclusion (FEIE) or foreign tax credits to reduce their US taxes, itemizing can still play a significant role.

Consider these unique opportunities:

• Foreign housing deductions: If your tax home is in a foreign country and you meet the bona fide residence test or the physical presence test, you may qualify for the foreign housing exclusion or deduction on Form 2555.
• Dual taxation considerations: If you pay both US state taxes and foreign taxes on the same income, the SALT deduction can help offset the state-level portion of that burden – even if foreign income taxes are better handled through the Foreign Tax Credit.
• International mortgage deductions: Mortgage interest on properties abroad might still be deductible under US rules.

NOTE! Foreign income taxes can generally be claimed either as a credit on Form 1116 or as an itemized deduction on Schedule A, but not both, and taxes on income excluded under the FEIE or foreign housing exclusion cannot be claimed either way.

How to file Schedule A

Filing Schedule A is straightforward, especially with the help of a CPA or tax software. Here's how it works:

1. Gather your receipts: Medical bills, property tax statements, donation acknowledgments – collect everything before you start.
2. Calculate your deductions by category: Add up eligible expenses for each category listed above.
3. Compare totals to the standard deduction: If your itemized deductions exceed the standard amount for your filing status, itemizing makes sense.
4. Attach Schedule A to Form 1040: Submit your completed Schedule A with your tax return.

Schedule A preview

Common mistakes to avoid when itemizing deductions

Even seasoned taxpayers can slip up when itemizing deductions, especially when living abroad. Here are some frequent mistakes and how to avoid them.

1. Forgetting foreign-specific rules

Expats often underestimate how living overseas impacts their US deductions. For example:

• Foreign real estate taxes: Under TCJA rules and the 2025 reform, foreign real estate taxes cannot be itemized on Schedule A. If you've been claiming these, it's worth reviewing your prior returns with a tax professional.
• Currency exchange rates: Always convert foreign expenses into US dollars using IRS-approved exchange rates. Misreporting these amounts can trigger red flags during an audit.
• Expat-specific tools: Tools like the FEIE or foreign tax credits can interact with your deductions, so consult a tax professional to ensure you're optimizing your situation.

NOTE! Review IRS Publication 54 for rules specific to expats and double-check any foreign expense eligibility for Schedule A.

2. Misreporting charitable donations

Charitable giving is a wonderful way to make an impact – and snag a deduction – but expats face unique challenges:

• Eligible charities: Only donations to IRS-approved organizations qualify. Foreign charities are usually not deductible unless they are registered as a US 501(c)(3).
• Proper documentation: The IRS requires a written acknowledgment for contributions over $250. If donating property, ensure you have a qualified appraisal for high-value items.

NOTE! Use the IRS Tax Exempt Organization Search tool to verify if a charity is eligible for deductions.

3. Not keeping records

The IRS loves documentation, and nothing stalls a smooth tax season like missing receipts. Common pitfalls include:

• Incomplete receipts: Make sure receipts show the organization name, donation amount, and date.
• Overlooking medical expense records: Keep all medical and dental bills, insurance statements, and transportation expenses tied to healthcare.
• No proof of payment: Bank statements or canceled checks are vital for substantiating deductions.

NOTE! Set up a digital filing system to store receipts and documents year-round. Tax prep will feel less like pulling teeth when you're organized.

Bottom line

Schedule A is a powerful tool for US taxpayers, especially expats navigating the complexities of international life. By understanding your deductible expenses, comparing 1040 itemized deductions to the standard deduction, and seeking expert help when needed, you can minimize your tax burden.

Got questions? Reach out to Taxes for Expats today, and let's tackle your taxes together.

FREE

Not sure if Schedule A is right for you?

We've got you covered.

Schedule my free call