It's said that the only things certain in life are death and taxes - but that doesn't mean you should pay more than your fair share to Uncle Sam.
And you will if you don't take advantage of several deductions you may be entitled to - but might not know about.
"Early Show" money maven Ray Martin spotlighted several that could surprise you:
About 46 million people itemize their tax forms, which results in close to $1 trillion worth of deductions for them. On the other hand, there are 85 million people who claim a half a trillion dollars just using standard deductions. So, half the people are getting double the benefit. Furthermore, some of the money those 46 million people are getting isn't even from itemized deductions. It's from tax credits and write-offs you get even without itemized deductions. As far as facts and figures from the IRS, they don't audit tax returns to see if people missed deductions and call you up and say, "Hey, you missed some deductions. We're going to give you more money." They're auditing to see if people are claiming too much. So there's no way to tell when people aren't claiming enough. It's more speculation than anything else, but the bottom line is, a lot of people aren't claiming things they could legally claim because they're just not aware of many of the deductions they're entitled to.
NEW THIS YEAR, FOR VEHICLES PURCHASED IN 2009: VEHICLE SALES TAX DEDUCTION
I like this one for a couple reasons. First, a lot of people bought a new car during the 2009 Cash for Clunkers program, so many of those people can benefit from it. And the second reason, it allows taxpayers to take a deduction for state and local sales taxes paid on the purchase of a new vehicle, and its available whether or not a taxpayer itemizes deductions on their Schedule A. You can't deduct the cost of the vehicle, but you can deduct the cost of the sales tax. There are some limitations as far as the qualifying dates as well as earnings brackets, so check the IRS website for details.
DON'T MISS: JOB SEARCH DEDUCTION
This is another big one, mainly due to the fact that so many people lost their jobs in 2009. It's unfortunate, but many of those people may not realize that the expenses related to looking for a new job are deductible, even if you didn't get the job you were looking for. We're talking about things like fees paid to employment agencies, help on your resume, advertising, postage, long distance calls, travel .. even business meetings and such.
There are multiple ways to deduct the mileage you drive in your personal vehicle from your taxes. You can deduct mileage for things like necessary medical care - for example, if you have to travel frequently back and forth to a doctor's office or hospital. Add up those miles, because for 2009, you'll get a 24 cents per mile deduction for medical-related travel. Also, if you're doing charitable work, that's also deductible. And for that, you get 14 cents per mile.
PROPERTY TAX DEDUCTION FOR NON-ITEMIZERS
This is a new addition, which began in 2008. And any time you have a new one, a lot of people don't have a handle on it. People who ordinarily didn't deduct or itemize deductions - meaning they never wrote these expenses off, people who paid off their mortgage, etc. can now write off their property tax, even if they don't itemize deductions. It used to be that if you wanted to deduct your home's property taxes from your income, you had to itemize (using Schedule A). But a new law passed in 2008 lets you increase your standard deduction by the amount of real property tax you could have claimed if you did itemize -- up to $500 ($1,000 on a joint return).
CHILD CARE CREDIT
A credit is so much better than a deduction, as it reduces your tax bill dollar for dollar. So missing one is even more painful than missing a deduction that simply reduces the amount of income that's subject to tax. If you pay your child care bills through a reimbursement account at work, it's easy to overlook the child care credit. Although only $5,000 in expenses can be paid through a tax-favored reimbursement account, up to $6,000 (for the care of two or more children) can qualify for the credit. So if you run the maximum through a plan at work but spend even more for work-related child care, you can claim the credit on as much as $1,000 in additional expenses. That would cut your tax bill by at least $200.
TAX PREPARER COSTS
Anything related to tax preparation and planning - legal fees, accounting fees, etc. fall under the category of miscellaneous itemized expenses. And they count as a deduction.