There's still time to trim your 2010 tax bill
Even though 2010 is history, you may still be able to trim your 2010 tax bill. Be sure you don't overlook the following actions and deductions that could save you money.
- Maximize your 2010 IRA contribution. You have until April 18, 2011, to make deductible 2010 contributions. The maximum 2010 contribution is $5,000 ($6,000 if you were 50 or older last year).
- If you changed jobs in 2010, make sure you didn't have excess social security taxes withheld. Claim credit for the excess on your Form 1040 if you paid over $6,622.
- Look into itemizing deductions if you usually take the standard deduction. Search for allowable deductions that you might have overlooked, such as the restored 2010 deduction for state and local sales taxes in lieu of deducting state and local income taxes.
- Medical deductions are allowable to the extent they exceed 7.5% of adjusted gross income (AGI). Don't forget items such as eyeglasses and hearing aids. You can deduct mileage for 2010 medical appointments at 16.5Â¢ a mile, plus parking and toll fees.
- Don't overlook tax preparation fees, safe deposit costs, and certain investment advice. They all qualify as miscellaneous deductions, subject to a 2% of AGI limit.
- Up to $2,500 of student loan interest is deductible whether you itemize or not.
- The deduction of up to $4,000 for qualified tuition and school expenses is available for 2010. Qualifying amounts for you, your spouse, and dependents may be deductible. Income limits apply.
- If you're a teacher or teacher's aide, you can deduct up to $250 for classroom supplies that you purchased with your own money.
- If you made energy-saving improvements to your home, check into the credit of up to 30% of your cost, subject to a $1,500 limit for the amounts spent in 2009 and 2010.