Just as sure as you want to know if Jessica Simpson is gaining weight, your peanut butter is going to be recalled or if Obama’s economic stimulus plan is going to stimulate the economy, you’ll want to know if there are any tax deductions that you may be overlooking. Read on to make sure you are getting every tax deduction you deserve.

A Tax Fact from The Tax Institute at H&R Block

On average, taxpayers overpay Uncle Sam each year by about $400 per return due to missed tax breaks and savings incentives.  For example, nearly one million people fail to itemize mortgage interest, resulting in an overpayment of $473 million, according to a 2002 GAO Report. In addition, more than two million taxpayers use the standard deduction when they should itemize, costing them lots of tax-savings dollars. Here are some more of the most common overlooked deductions so you can make sure you don’t miss the obvious:

Itemized deductions:

1. Medical expenses - in addition to what you’ve spent on doctors, hospitals, and medicines, other possibilities are health insurance premiums, prescription eyeglasses and contacts, hearing aids, medical transportation, equipment for handicapped people, and nursing home expenses.
2. State and local income taxes and personal property taxes.
   Charitable contributions - cash and property donated to charitable organizations, including household items donated to charities.
3. Out-of-pocket job expenses that were not reimbursed by your employer, including car expenses (the non-commuting kind), travel expenses, uniforms, union dues, and continuing education expenses.

And, good news for those that don’t itemize:
New for 2008. You can deduct state and local real property taxes up to $500 ($1,000 on a joint return) even if you don’t itemize. The deduction is claimed as an additional standard deduction. This is great news for homeowners who have paid off their mortgages or who otherwise don’t have enough deductions to claim itemized deductions on their tax returns.

“Above-the-line” deductions:
Properly called adjustments to gross income, these deductions are available whether or not you itemize. The traditional IRA is one of the best-known of these. But you may also be eligible to deduct:

1. Student loan interest – up to $2,500.
2. Tuition and fees deduction – up to $4,000 of qualified higher education expenses.
3. Moving expenses - the cost of moving to yourself, your family, and your belongings (including your pets) to a new job location.
4. Military reservists deduction – for non-reimbursable travel expenses for reservists.
5. Deductions for the self employed: one-half of self-employment (social security) taxes; 100% of self-employed health insurance premiums; contributions to self-employed retirement plans (SEPs, SIMPLEs, etc.)
6. Alimony - the alimony you pay to a former spouse is deductible; child support is not.

This Tax Fact is brought to you by The Tax Institute at H&R Block.

To view other helpful tax information or listen to our Tax Fact podcasts, visit www.digits.hrblock.com

As always . . . everyone’s tax situation is different, so be sure to consult a tax professional or financial advisor before making important financial decisions.

This Tax Fact is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice, nor is it intended to be used to avoid IRS penalties.