Tax Deductions 2010 - Are You Getting As Much Money Back As You Should Be?

Wouldn't it be great if the IRS would do audits to determine whether taxpayers had missed any deductions they were entitled to? Sadly, that's not likely to happen. Meanwhile, many taxpayers miss important deductions that could save them a substantial amount of money.

Professional tax preparers hear over and over again, "Really? I can deduct that?" On top of that, each year there are changes to the tax laws that most people simply aren't aware of.

The year 2010 was a big one for tax law changes. Not only were there numerous changes to tax deductions in 2010, but by the end of the year some of the earlier changes were changed again. It can be almost overwhelming for the average person to keep up. But, not doing so can result in too much tax being paid because not all applicable deductions were taken.

While there are too many changes in 2010 tax deductions to cover them all here, a short list of some of the most important changes are touched upon.

One of the major deduction changes involves the First Time Homebuyer Credit. There have been changes from the Homebuyer's Credit of 2009. The one in 2009 had to be repaid; the one in 2010 does not have to be repaid if you live in the house for the requisite amount of time. The 2010 law also includes a credit for long-time homebuyers, not just first time homebuyers. Specific closing documents are required by the IRS for taxpayers to claim this credit.

There are numerous professional expenses that many taxpayers can deduct. Many travel and transportation expenses can be deducted, too. And, military personnel qualify for any number of special deductions.

A number of deductions originally scheduled to expire after 2009 were extended until the end of 2011 making them still applicable in 2010. These include the State and Local Sales Tax Deduction, Qualified Tuition Expenses, Teacher Classroom Expenses, and IRA Distribution to Charity. The Alternative Minimum Tax was also changed so that middle class taxpayers are less likely to pay it.

Looking into 2011, there were changes to the Standard Mileage Rate for deducting up to four automobiles. There were also changes to the Moving Rate and Medical Travel. Cell phone record keeping requirements have been revised. Energy credits have been modified and the American Opportunity Credit was extended.

While it can be challenging to stay on top of all the changes in tax deductions, it can save taxpayers a significant amount of money if they do so. Although you may use a professional tax preparer, or rely on a software program to do your taxes, it is still important for taxpayers to have a clear understanding about which tax deductions may apply.

Taking time to stay informed can make the difference between getting a smaller refund than you would otherwise be entitled, or paying in far more than you would need to pay if all applicable deductions had been claimed.