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Question:


Tax time is here. What are some commonly overlooked deductions and credits?
-April15orBust


Answer:


One that applies this year is the "Making Work Pay" credit, part of the hodgepodge of economic stimulus measures enacted over the last few years. If you earned $75,000 or less in 2010, double for married couples filing jointly, you can cut your tax liability by $400 or $800. Just make sure you fill out Schedule M on Form 1040 and file by April 15.
 
You may also want to contribute to an individual retirement account. The popularity of IRAs has waned as 401(k) programs have come into more widespread use. You can still contribute up to $5,000 a year ($6,000 if you're at least 50 years old) to an IRA if you don't have a 401(k) at work or if you meet certain income limits even if you do have one. Contributions are deductible at your top federal and state tax rates, and all income will be tax free, too, although the money will be taxed when you withdraw it in retirement, presumably at lower rates.
 
You can also take deductions for a diverse array of expenditures, including for child care, energy-efficient home improvements or cars or cash and non-cash charitable donations. If you relocated to take a new job, with a different employer or the same one, or to take your first job, you can deduct the cost of the move, too. Just remember, save receipts, check stubs and other evidence.
-Conrad de Aenlle



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