2010 Tax Deductions - Are You Claiming Every Deduction You Could Be?

There's no such thing as an IRS audit for the purpose of identifying deductions that taxpayers miss (don't we wish?!). It's also extremely common for people to submit their tax return having no idea that they've missed important deductions and left a substantial amount of money on the table.

It's not uncommon for tax professionals to repeatedly hear, "Really? I can deduct that?On top of that, every tax season there a changes to deductions that a majority of people simply are not aware of.

2010 was a major year for changes to tax deductions. 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. I can be somewhat daunting for the average person to stay abreast. Not doing so usually results in paying far more in taxes because eligible deductions were not paid.

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 most significant changes in IRS deductions applies to the First Time Homebuyer Credit. It is different from the Homebuyer's Credit of 2009. The 2009 version 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 version of the law also includes a credit available for repeat 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. There are many deductions for travel and transportation expenses if you know what to claim. And, taxpayers in the military may qualify for a variety of special tax 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 changes to the Qualified Tuition Expenses, Teacher Classroom Expenses, IRA Distribution to Charity, and State and Local Sales Tax Deductions. 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. The American Opportunity Credit was extended and energy credits have changed.

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. Even if you use a professional tax preparer or a software program to prepare your taxes, taxpayers still need to understand which deductions may apply.

Taking time to be truly informed can make the difference between paying too much to the IRS or keeping more for yourself when claiming all possible deductions.


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