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Maximize Your Tax Refund With New Deductions

POSTED: 7:50 pm EDT April 5, 2009
UPDATED: 2:12 pm EDT April 6, 2009

J. J. Hoffman runs a successful business and cares for his growing family. But during tax time, he said he wouldn't go it alone.

"There (are) tons of changes every single year," Hoffman said. "There's no way I would want to do that on my own."

Hoffman employed CPA, Neil Jay, who knows the tax front changes every single day.

"I get emails on a daily basis for new tax law and tax law changes," Jay said.

No. 1 way to maximize your tax refund:

This year, you can increase your standard deduction by the amount of real property tax you pay ... up to $500 for an individual and up to $1000 for a couple.

"This is a really exciting deduction for this year," Jay said.

It's brand new and helps those who don't itemize.

No. 2 way to maximize your tax refund:

If you drive your vehicle for volunteer work, business, or travel for frequent medical treatments, you can deduct miles driven at 14 cents a mile.

Jay said, "Typically this gets overlooked a lot."

For medical treatment and business-relate mileage, Jay said there is something you need to remember.

Jay said, "You really need to know when you acquired that mileage, not just how much mileage ... because for the first half of the year, the deduction is about 19 cents a mile for medical. For the second half of the year, it jumps to 27 cents per mile."

The IRS increased the amount when gasoline prices soared last year.

No. 3 way to maximize your tax refund:

You can now deduct your private mortgage insurance, or PMI.

"Usually $100 a month possibly," Jay said.

And that adds up big.

No. 4 way to maximize your tax refund:

A $7500 credit is available to first-time homebuyers, but it is not free money. Jay said to be careful.

"It is really essentially a zero interest load. The catch with this credit is that it will have to be repaid. So starting in the following year at $500 a year for the next 15 years, you will have to pay this credit back," Jay explained. "And what's even more detrimental that that is, say you decide to sell the home in a couple years, then the full credit is to be repaid on that year's tax return."

No. 5 way to maximize your tax refund:

If you're leaning toward getting help from a tax professional, you can deduct the cost of tax preparation.

There's a laundry list of items you can take as "miscellaneous deductions" as long as -- in total -- they're more thank two-percent of your adjusted gross income.

Other deductable expenses include safe deposit box rental, job hunting expenses and trade association memberships.

One important caution, do get good help if you need it. Making a mistake out of ignorance on your taxes is no defense in the eyes of the IRS and mistakes could cost you big.

If you've already file but didn't take advantage of one of the deductions you're due, you can still file a form 1040X.



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