Don’t overlook these tax break

Don't overlook these tax breaks. Tax credits, deductions and exemptions available to just about every taxpayer. Thu Mar 03 2011 Every year millions of taxpayers have the opportunity to take advantage of some significant tax breaks. According to an Associated Press report, there are $1.1 trillion in tax credits, deductions and exemptions in the tax code.  Those breaks come in different forms.  2009 tax data shows that home mortgage interest deductions saved 34.6 million taxpayers nearly $77 billion.  By deducting charitable donations, 36 million families cut their taxes by nearly $35 billion.   With just a little bit of knowledge, you could take a healthy bite out of your taxes.  To get you started, here are some of the most common tax breaks:   Charitable donations – most people know to claim a deduction for a qualifying cash donation to a charity, but don't forget those donations of clothing in "good used condition or better,"  or other goods.  Just be sure to have a receipt from the charity that states the value of your donation. Childcare – for many working families, it's an unavoidable expense.  Claiming the child and dependent care credit can ease the burden.  It is important to request receipts from your childcare provider that show your payments. Work related expenses – you may be able to write off unreimbursed job search expenses if you were out of work.  These could include employment agency fees, transportation, lodging and food on overnight trips for interviews.  Or if you relocated for your job, you may be able to write off some of the relocation expenses. Energy efficient home improvements - if you're doing home improvements, consider energy efficient external windows and doors, insulation, heating and cooling equipment, and more.  You could get a tax credit up to 30% of the cost of qualifying items. You could also get a tax credit for 30% of the cost of renewable energy home additions such as a solar energy systems or a geothermal heat pump. This credit has a lifetime limit of $500 after 2010. Automobile tax credit – a hybrid gas-electric or alternative fuel vehicle could get you a 2010 tax credit if you bought a qualifying  vehicle before the end of 2010. American Opportunity Credit – you could get a tax credit for up to $2,500 for college tuition and related expenses that you paid during the year.   You can also get a deduction on the state income tax you paid the previous tax year, and any real estate or property taxes you paid during the year.  You can also claim the sales tax you paid on the purchase of a car if you itemize deductions.  And the list goes on.   Make sure you're not missing a break you have coming.  Before you complete your tax return, do a little digging.  Make a list.  Then you can sit down with your tax professional and have a discussion about everything that is available to you.   HELPFUL HINTS Understand the difference between a deduction and a credit. A deduction reduces the income on which your tax is determined..  A credit reduces your taxes dollar-for-dollar, making it the more valuable of the two.