10 Often Overlooked Tax Breaks

Tax time is winding down. For most of us who've yet to file a return, the reason for the delay is that we owe Uncle Sam.

We might be able to shave some off that IRS bill, however, by making sure we take every tax deduction, credit or other income adjustment possible.

Here are 10 tax breaks -- some for itemizers only, others that any filer can claim -- that often get overlooked but that could save you some tax dollars.

1. Additional Charitable Gifts

Everyone knows that giving to your favorite charity is good for your soul, good for the organization and good for your taxes if you itemize. But some charitable gifts never get counted on many tax returns. These are expenses you incur doing charitable work.

You can't deduct the value of your time spent volunteering, but if you buy supplies for a group, the cost of that material is deductible. Similarly, if you wear a uniform in doing your good deeds, for example as a hospital volunteer or youth group leader, the costs of that apparel and any cleaning bills also can be counted as charitable donations.

So can the use of your vehicle for charitable purposes. "If you use your car in performance of providing charity services, you can deduct 14 cents per mile plus parking or toll fees you may have paid," says Bob D. Scharin, RIA senior tax analyst. This includes such things as delivering meals to the homebound in your community or taking the Scout troop on an outing, while of course wearing your freshly cleaned uniform.

2. Moving Expenses

Most taxpayers know that they can write off many moving expenses when they relocate to take another job. But what about your first job? Yes, the IRS allows this write-off then, too.

"We generally think of this as a break for someone who has a job change, because it must be job-related to be claimed," says Scharin. "But a recent college graduate who gets a first job at a distance from where he or she has been living is eligible."

The general test is that the new job must be at least 50 miles farther from your previous residence than your last office was. That means if you lived 15 miles from your old job, the new workplace must be at least 65 miles from your old home.

"For someone who was not previously working," says Scharin, "the test would be that the new job be at least 50 miles from the person's old residence."

3. Job Hunting Costs

While college students can't deduct the costs of hunting for that new job across the country, already-employed workers can. Costs associated with looking for a new job in your present occupation, including fees for resume preparation and employment of outplacement agencies, are deductible as long as you itemize. The one downside here is that these costs, along with other miscellaneous itemized expenses, must exceed 2 percent of your adjusted gross income before they produce any tax savings. But the phone calls, employment agency fees and resume printing costs might be enough to get you over that income threshold.

4. Military Reservists' Travel Expenses

Members of the military reserve forces and National Guard pay many prices to serve their country. The IRS gives back a little by allowing them a deduction for travel expenses to drills or meetings. To qualify, you must travel more than 100 miles and stay overnight for the training exercises. In these cases, service personnel can deduct the cost of lodging and half the cost of meals. If you drive to the training, be sure to track your miles. You can deduct them on your 2007 return at 48.5 cents per mile (50.5 cents a mile in 2008), along with any parking or toll fees for driving your own car. You get this deduction whether or not you itemize, but you will have to fill out Form 2106.

5. Child, and More, Care Credit

Every parent knows about the Child and Dependent Care tax credit. Millions claim it each year to help cover the costs of after-school day care while mom and dad work. But some parents overlook claiming the credit for child care costs during the summer.

"It also applies to summer day camp costs," says Scharin. The key here is that the camp is a day-only getaway that supervises the child while the parents work. You can't claim overnight camp costs.

Remember, too, the dual nature of the credit's name: child and dependent. If you have an adult dependent who needs care so that you can work, those expenses can be claimed under this tax credit.

6. Mortgage Refi Points

When you buy a house, you get to deduct the points paid on the loan on your tax return for that year of purchase. But if you refinance the house or buy a second residence, those loan points can only be deducted incrementally each year over the life of the loan.

There is, however, an exception to this drawn-out refi loan points deduction. "If you sell the home or refinance again before you have deducted the full amount of points you paid, you can deduct that remaining amount in the year of the subsequent refinancing or sale," says Scharin.

The one rule to be aware of here is that in order to get the full points deduction on a second refi, the loan must be with a different lender. If you refinance with the original lending institution, you must add points on the latest deal to the leftovers from the previous refinancing and continue to deduct the expense ratably over the life of the new loan.

7. Many Medical Costs

Taxpayers who itemize deductions know how difficult it often is to reach the 7.5 percent of adjusted gross income threshold required before you can claim any medical expenses. It might be easier to clear that earnings hurdle if you don't overlook miscellaneous medical costs:

• Travel expenses to and from medical treatments at 20 cents per mile for 2007 taxes, 19 cents per mile in 2008.

• Insurance premiums you pay from already taxed income, including some long-term care insurance costs.

• Uninsured medical treatments, such as vision examinations and chiropractor treatments.

• Alcohol- or drug-abuse treatments.

• Medically necessary weight loss programs.

• Some household improvements if prescribed by a physician to treat a specific ailment.

Self-employed taxpayers who are not covered by any other employer-paid plan, for example, one carried by a spouse, can deduct 100 percent or health insurance premiums as an above-the-line adjustment at the bottom of Page 1 of Form 1040.

8. Retirement Tax Savings

The Retirement Savers Credit was created to give moderate- and low-income taxpayers an incentive to save for retirement. When you contribute to a retirement account, either an IRA (traditional or Roth) or a workplace plan, you can get a tax savings for up to 50 percent of the first $2,000 you put into such accounts. This means you get a $1,000 tax credit, which is a tax break that directly reduces any tax you owe, as well as the $2,000 reduction in your income. Because it was designed to assist lower-income workers, this credit isn't available to all, but if you qualify, don't waste it.

9. Educational Expenses

The Internal Revenue Code offers many tax-saving options for individuals who want to further their educations. "People generally think of these as applying to a person who has a child who is a full-time student," says Scharin. "But they also could be useful to someone of any age who's gone back to school or is taking a course at night."

In these cases, you have the option of the tuition and fees above-the-line deduction, which will take up to $4,000 off your taxable income, or the Lifetime Learning Credit, which could provide savings of 20 percent of tuition cost up to $10,000, or a $2,000 credit.

Don't be immediately swayed by the dollar amounts. A deduction of $4,000 is only worth a $1,000 tax cut to a filer in the 25 percent bracket. A $2,000 credit, meanwhile, means you get to subtract two grand from your tax bill, possibly zeroing out what you owe. So run the numbers for both to make sure you get the best tax advantage.

10. Energy Efficient Home Improvements

Don't overlook the Residential Energy Tax Credit this filing season. It's the last chance you get to write off some home improvements that made your house more energy efficient. The tax breaks range from $50 for the installation of a whole-house circulating fan to $2,000 for installing solar-powered systems. Some of the credit amounts are also limited by any work you claimed on your 2006 return. But if you didn't max out your credits in 2006 and made additional energy upgrades in 2007, be sure to claim them this year by filing Form 5695.

Some of these tax breaks can save some filers a nice chunk of tax money. With others, the savings might be relatively small. But when it comes to taxes, every bit of savings helps. So make sure you don't overlook any of these possible tax breaks as you finish up your 2007 return.