Phaseout of 2013 Itemized Deductions

For federal tax purposes, married taxpayers with income over $300,000 ($275,000 if head of household, $250,000 if single, or $150,000 if married filing separately) may have to reduce their itemized deductions by the lesser of:

  • 3% of the excess of adjusted gross income (AGI) over a certain amount, or
  • 80% of the amount otherwise allowable for the taxable year.

The following itemized deductions do not have to be reduced:

  • Medical expenses
  • Investment interest
  • Casualty or theft losses
  • Gambling losses and certain casualty and theft losses claimed as a miscellaneous itemized deduction not subject to the 2% of AGI limitation

The reduction also applies for Wisconsin when using federal itemized deductions to determine the Wisconsin itemized deduction credit.

The following federal itemized deductions are used for purposes of the Wisconsin itemized deduction credit: medical expenses; certain interest expenses; gifts to charity; and casualty and theft losses only if the loss is directly related to a federally-declared disaster. Because medical expenses and casualty and theft losses are not affected by the phaseout, the reduction for Wisconsin itemized deductions only needs to be computed for interest expenses and gifts to charity.

Note: The following worksheets are based on the amount of reduction to itemized deductions as determined on the federal Itemized Deductions Worksheet (see the instructions for federal Schedule A). This federal worksheet may need to be recomputed if you are filing Wisconsin Schedule I to determine  federal adjusted gross income based on the provisions of the Internal Revenue Code that are in effect for Wisconsin.

If federal itemized deduction are subject to the 80% reduction:

Complete Worksheet 1 and Worksheet 2 to determine the amount of interest expense and gifts to charity that may be claimed for the Wisconsin itemized deduction credit.

worksheet 1-interest expense image


worksheet 2-gifts to charity image


If federal itemized deductions are reduced by 3% of the excess AGI:

Complete Worksheet 3 and Worksheet 4 to determine the amount of interest expense and gifts to charity that may be claimed for the Wisconsin itemized deduction credit.


worksheet 3-interest expense image


worksheet 4 - gifts to charity image

March 10, 2014