• For 10% of the cost of “qualified improvements” with maximum limitations. Ask your tax preparer for more information.

•  The $3,500 or $4,500 voucher or payment made for such voucher under the CARS "cash for clunkers" program to buy or lease a more fuel-efficient vehicle is NOT taxable for federal income tax purposes.

• • For 2009, the first $2,400 of unemployment compensation per person is not taxable.

• • If you, your spouse, or your dependents attend college during the year, educational credits can noticeably reduce your taxes. The Hope Credit allows up to $2,500 per student and is available for first 4 years of post-secondary education.

• • If you bought a new motor vehicle in 2009 after February 16th, you may be able to deduct any state,local, or excise on the purchase.

• A noncustodial parent claiming an exemption for a child can no longer attach certain pages from a divorce decree or seperation agreement instead of Form 8332 if the decree went into effect after 2008. The noncustodial parent must attach Form 8332 or a similar statement signed by the custodial parent and whose only purpose is to release a claim to exemption.

• The amount of taxable investment income a child can have without it being subject to tax at the parent's

• You can now use your refund to buy up to $5,000 in U.S. Series I savings bonds in multiples of $50. Use Form 8888, Direct Deposit of Refund to More Than One Account

• For 2009, the standard mileage rate for the cost of operating your car for business use is 55 cents per mile, for medical reasons is 24 cents per mile, and to determine moving expenses it is 24 cents per mile.

1)      Fund your Retirement Plan

·        One of the best tax shelters still around is your employer-sponsored retirement plan.  Many employers offer matching programs and will match your contributions up to certain limits. Contributions are still fully deductible from income and will grow each year tax-free.  Taxes are deferred until such time as you withdraw the funds.

2)      Using the Standard Deduction to Bunch Itemized Deduction

·        By bunching or pushing payments for deductible expenses into every other year and taking the standard deduction the following year you can increase your total deductions. Deductions that allow you to use this strategy include charitable contributions, estimated state tax payments, property taxes and your January mortgage payment.

3)      Employ Spouse for Medical Deductions

·        If you are self-employed, consider hiring your spouse and giving your employee-spouse the medical benefits.  Benefits not deductible by the owner are often fully deductible by employer for an employee-spouse.

4)      Catch-up Pension Contributions:

·        Getting close to retirement and need to increase your pension contributions?  Taxpayers that are at least 50 years of age can make additional catch-up IRA contributions.  The normal maximum contribution limit of $4,000 may be increased by $1,000 to $5,000.

When it comes time to decide whether or not to itemize, the general rule is to itemize if your deductions exceed what Uncle Sam has offered as a standard deduction.  Add up your deductible expenses.  If they’re more than the standard deduction, itemize; if not, take the standard deduction.  Use the partial list of itemized deductions below as a checklist to help determine whether you may benefit from itemizing. 

Here is a partial list of many of the items that Uncle Sam allows us to deduct as itemized deductions on Schedule A.  Scan through them and make sure you’re not overlooking any.

Medical & Dental costs which include:

·        Doctor & dentist fees

·        Prescription medicines

·        Insulin

·        Acupuncture

·        Air Conditioner; necessary for allergies or respiratory ailments

·        Nursing fees

·        Hospital fees

·        Contacts, including supplies used with contact (saline & enzyme cleaner)

·        Chiropractic services

·        Medical, dental, and long-term care insurance

·        Hearing Aids

·        Dentures

·        Guide dog for physically disabled persons

·        Cosmetic surgery for deformity relating to a congenital abnormality, accident, or disease

·        Special equipment installed in home to provide a medical benefit

·        Birth control prescribed by a doctor

·        State income taxes

·        Real estate taxes

·        Personal property taxes

·        Home mortgage interest

·        Points paid on purchase of residence

·        Points paid on refinancing

·        Investment interest

·        Charitable contributions

·        Casualty losses

·        Theft Losses

·        Tax return fees

·        Safe deposit box used to store investments

·        Work cloths not suitable for normal wear

·        Expenses relating to tax planning

·        Expenses relating to investments

·        Professional dues& Union dues

·        Certain unreimbursed employee expenses

·        Subscriptions to professional magazines

·        Continuing professional education

·        Occupational licensing fees

·        Travel expenses relating to managing investments

·        IRA administration fees

·        Job-hunting cost

·        Medical exams required by employer

·        Gambling losses to extent of gambling winnings

·        Estate taxes

·        Fees to collect interest or dividends

·        Legal fees for collecting taxable income or keeping a job

·        Trust administration fees

·        Impairment-related work expenses

·        Mortgage insurance premiums

Note:  The legislation allows taxpayers who itemize their deductions to   deduct premiums paid for mortgage insurance-which typically is required       when their down payment for their home is less than 20% down