Big deductions too many of US miss – tax preparation in America

1 Charitable noncash contributions

2  Points on refinancing

3  Old points on refinancing

4  Health insurance premiums

5  Educator expenses

6  Higher education expenses

7  Energy Savings Home Improvement Credit

8  Investment and tax expenses

9  Casualty deductions

10  Retirement tax credit

Charity, as I hope everyone remembers, begins with a tax deduction. Now, let’s say you emptied your closets and gave everything to Goodwill or a similar charity. The value of your donated items — clothes, furniture, whatever — is deductible. Get a written receipt. With noncash charitable contributions, the rule is simple: No receipt means no deduction if you get audited. Clothes and household goods must be in good or better condition to get the deduction.

If you’ve already dumped your old clothes in a Salvation Army box and walked away without a receipt, take the deduction anyway. You’ve legitimately made the contribution. You just may not be able to prove it in an audit. Starting with 2007 returns, the law has required a receipt or some sort of written confirmation for all charitable donations. Feel lucky? Play the audit lottery. You’re still an honest person.

If you can, reconstruct as much as you can the list of items you donated and then figure out their market value. The easiest way is to go to a thrift store and check prices there. The Salvation Army also has value guides for donated items on its regional websites. (Or see the valuation guideline schedule on page 257 of the 2011 edition of my book "How to Pay Zero Taxes." Borrow it from the library if you don’t want to buy it.)

And, of course, when you make your next donation, get that receipt

 

Points on refinancing

With interest rates remaining so low over the past few years, lots of homes have been refinanced, sometimes more than once.

Any points you pay to refinance your home can be deducted on a monthly basis over the life of the new loan. So if you refinanced your mortgage on June 1, 2010, for a 20-year term, seven out of 240 months will have passed before Dec. 31, 2010. If you paid $2,400 in points, you can write off $70 ($10 a month for seven months) for 2010.

You can write off $120 for 2011 and each year thereafter until the points have been deducted in full. The amount may not be huge, but every little bit helps