You should use Form 2, Schedule III, to calculate your itemized deductions, but remember that your Montana itemized deductions may be different from your federal itemized deductions. There are federal deductions that are not allowed on your Montana tax return and state deductions that are allowed only on the Montana tax return. If you are married and you are filing separately on the same form or on separate forms, you should apply the following rules:
●● Both spouses should either claim the standard deduction or itemize their deductions. You are not allowed to claim one method for one spouse and
another method for the other spouse.
● Deductions that are attributable to only one spouse have to be claimed by that spouse. This includes, for example, federal income tax withheld from your wages and your employee business expenses reported on federal Form 2106.
● Payments made from accounts owned by both spouses and that pertain to both spouses can be allocated to either spouse in any proportional amount.
Line 1 – Medical and Dental Expenses
Lines 2 and 3
The Patient Protection and Affordable Care Act of 2010 affected some filers’ itemized deductions for medical expenses. Beginning with the 2013 tax year, individuals under age 65 at the end of the tax year can only deduct medical expenses that exceed 10% of their Montana adjusted gross income. Individuals 65 or older on January 1, 2015 can deduct expenses that exceed 7.5% of their adjusted gross income. For a married couple filing a joint return, only one spouse must be 65 or older for the lower rate to apply. If a married couple files separate returns, the individual’s age determines the rate, no matter if they filed on the same form or not. Therefore, the 10% rate applies to an individual who is under 65 even if his or her spouse is over 65.
Line 4 – Deductible Medical and Dental Expenses
Line 5 – Medical Insurance Premiums
Line 6 – Long-Term Care Insurance Premiums
Lines 7a through 7e – Federal Income Tax
Line 8 – General State and Local Sales Taxes Paid in 2014
Line 9 – Local Income Taxes Paid in 2014
Line 10 – Real Estate Taxes Paid in 2014
Line 11 – Personal Property Taxes Paid in 2014
Line 12 – Other Deductible Taxes
Line 13 – Home Mortgage Interest and Points
Line 14 – Qualified Mortgage Insurance Premiums
Line 15 – Investment Interest
Line 16 – Contributions Made by Cash or Check
Line 17 – Contributions Made Other Than by Cash or Check
Line 18 – Contribution Carryover from the Prior Year
Line 19 – Child and Dependent Care Expenses
Line 20 – Casualty and Theft Loss
Line 21 – Unreimbursed Employee
Line 22 – Other Expenses
Line 27 – Political Contributions
Line 28 – Other Miscellaneous Deductions Not Subject to 2% of Montana Adjusted Gross Income